Fed Barkin: "The 0.5~0.75%P Rate Hike Proposed by Powell Is Justified"

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Thomas Barkin, President of the Federal Reserve Bank of Richmond, supported raising the benchmark interest rate by 0.5 percentage points or 0.75 percentage points in July.

According to the Wall Street Journal (WSJ), President Barkin attended the National Association for Business Economics (NABE) online event on the 21st (local time) and stated, "We are facing a situation where inflation is high, broad-based, and persistent, and interest rates are still very low compared to normal times."

He previously commented on Federal Reserve Chairman Jerome Powell's statement that a 0.5 percentage point or 0.75 percentage point rate hike could occur at the July Federal Open Market Committee (FOMC) meeting, saying, "There was no problem at all." He also evaluated that "he gave a range that feels pretty reasonable to me." In effect, he expressed support for the 0.5 percentage point or 0.75 percentage point increase.

President Barkin does not have voting rights at the FOMC. However, such remarks provide insight into the Fed's sentiment regarding rate hikes. He also said he "definitely supported" the Fed's decision last month to take a giant step by raising the benchmark interest rate by 0.75 percentage points at once.

Furthermore, President Barkin acknowledged that many people are concerned about a recession as the Fed tightens monetary policy to curb inflation, saying, "I can understand that." However, he added that most recent consumer spending data is favorable and the labor market remains strong.

He also mentioned that the intensity of the Fed's rate hikes will ultimately be determined by the economic indicators that are released.