Fed’s Barkin says it makes sense to be ‘patient’ on rate cuts

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It is a good idea for the Federal Reserve to take its time with interest-rate cuts given all of the uncertainty about where the economy is headed, Richmond Fed President Tom Barkin said Wednesday, in an interview with MarketWatch.

“In all honesty, my forecast is uncertain. That’s why I think it’s a reasonable idea to be patient,” Barkin said.

Barkin said you can use the economic data to tell credible, but very divergent, stories about where the economy is headed.

“I could tell you a story of a healthy economy and softening inflation, but I could tell you a bunch of other stories, the Richmond Fed president said.

“I’m more in the world of elevated uncertainty.” He said the forecast he had eight weeks ago has been “confused” by some of the recent data.

Barkin, who is a voting member of the Fed’s interest-rate committee this year, said inflation has been coming down nicely over the past seven months. At the same time, he said was concerned that the significant decline in goods prices seen over that time might be a “head fake” and might rebound in coming months.

Barkin ducked questions of how many rate cuts he expects this year.

“I don’t have a rate-path focus. I have an economy focus,” Barkin said.

He said he was learning and wanted to have more confidence in which of the multiple economic outcomes “we are headed for.”

If inflation continues on its downward path, and if it starts to broaden out into many categories, “that’s the kind of signal I am looking for” to start normalizing rates, he said.

Stocks
DJIA

SPX
were higher in early trading on Wednesday while the 10-year Treasury yield
BX:TMUBMUSD10Y
was slightly lower to 4.10%.



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