Fed’s Barkin Expects Gradual Interest Rate Hikes Amid Persistent Inflation Concerns

Richmond Federal Reserve President Thomas Barkin stated on Thursday that the central bank will likely need to continue raising interest rates, though he remains uncertain about the exact extent and timing of these increases.

During a CNBC interview at the Richmond Fed’s 2026 CFO Summit, Barkin voiced concerns about inflation, indicating that monetary policy may require adjustments to address ongoing price pressures.

“With unemployment near record lows and inflation unacceptably high, the direction is clear; the key question is the pace of action,” Barkin remarked in his discussion with CNBC’s Steve Liesman.

“A gradual approach makes sense given the prevailing uncertainties and the value of incoming economic data,” he added, emphasizing a cautious stance.

Barkin’s comments come over a week after the Federal Open Market Committee (FOMC) voted to maintain the benchmark overnight borrowing rate within a range of 3.75% to 4%. Although Barkin is not a current voting member on the FOMC, he will hold that role in 2027.

In its post-meeting statement, the FOMC highlighted its intention to await the “accumulation of more information” before determining future policy moves. Following a quarter-point hike in September, officials had broadly agreed that another increase was probable before the end of 2026.

Barkin described current policy as being close to a neutral level that neither restricts nor stimulates economic growth, a concept officials use as a benchmark.

“If policy were overly restrictive, it would likely dampen consumption, which accounts for roughly two-thirds of the economy, and current levels appear somewhat accommodative in that context,” he explained.

He underscored inflation as the most pressing risk, expressing hope that the September adjustment and any subsequent actions will help mitigate price increases.

While artificial intelligence is contributing to price pressures, Barkin noted that it could eventually enhance productivity and ease inflation over the longer term.

Market indicators, via the CME Group’s FedWatch tool, show a greater than 80% probability of a rate hike in December, with another move anticipated in 2027.

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