Richmond Fed Chairman Barkin stated in his speech on Tuesday that although the inflation path is "not yet clear", "we have time to see if we have done enough, or if there is more work to be done
He pointed out that the overall annual inflation rate in September has slowed from its peak of 9.1% in June last year to 3.7%. "We have not yet reached the target, but we are moving in the right direction." Balkin expressed his support for the FOMC's decision to abandon interest rate hikes at the September meeting so that officials can gather more information. Yesterday, Philadelphia Fed Chairman Huck reiterated the statement made last Friday that interest rates can be maintained at the current level.
He emphasized, "If we make insufficient adjustments, inflation will reappear. If we make excessive adjustments, it will cause unnecessary harm to the economy
According to the September Consumer Price Index, the annual inflation rate is 3.7%. Excluding volatile costs such as food and energy, the core inflation rate is 4.1%. In the past three months, the annualized growth rate of inflation has been 3.1%.
Balkin stated that after talking to consumers and businesses in his region, he believes that the economy is returning to a more balanced state than official data.
Affected by the rise in interest rates, interest rate sensitive sectors such as real estate have already felt pressure. Companies selling to low-income customers told Balgin that these consumers are in a tight economic situation and are resetting their consumption priorities.
Balkin also added that some sources have pointed out that middle-income consumers are lowering their consumption levels, while banks are feeling profit pressure, thereby reducing investment in high-risk departments, new customers, and less profitable loans.
But he pointed out that the data shows that the economy is still strong. Balkin cited what he called a "stable" GDP growth rate of 2.1% and a lower unemployment rate of 3.8%. In addition, the recently released retail sales data also shows that the sales growth in the previous month exceeded expectations.
In terms of the labor market, Barkin stated that employers are more likely to hire workers, while employee turnover decreases. Wage pressure still exists, but it has eased from last year's extreme levels.
Balkin said, "I still hope to believe that demand is stabilizing, and any weakness will be transmitted to inflation. These questions are particularly difficult to answer today because the data is somewhat disconnected from what I heard locally