The Fed will still need to raise interest rates, the Richmond Federal Reserve president said, but could stick with slower, quarter-point increases
The unexpectedly strong January jobs report and retail sales may have been influenced by seasonal factors, and don’t necessarily point to overly strong demand that would raise concerns about efforts to control inflation, Richmond Federal Reserve president Thomas Barkin said on Friday.
He noted for example that the more than half-million payroll jobs added in January was partly the result of seasonal adjustments and the fact that companies apparently laid off fewer Christmas-season hires than would usually be the case – what Barkin called a logical response to a tight labor market.The Fed will still need to raise interest rates, he said, but could stick with slower, quarter-point increases and decide on a higher or lower stopping point as the path of inflation becomes clearer.
“I like the 25 basis point path because I believe it gives us the flexibility to respond to the economy,” said Barkin, who this is year is not a voting member of the Fed’s rate-setting Federal Open Market Committee.
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