Inflation tops risks for Fed’s Barkin as he signals cautious rate path

Caution remains warranted on monetary policy, Richmond Federal Reserve (Fed) President Thomas Barkin said on Monday, noting that risks to the Fed’s dual mandate “lie on the inflation side”. While describing the direction of policy as “straightforward”, he said policymakers should proceed “with care.”

Demand and widespread cost increases are keeping inflation under pressure, Barkin noted in remarks prepared for the Greater Greer Chamber of Commerce in South Carolina. He described the US economy as “remarkably stable” and said businesses were “trying to pass on higher costs.”

What are Barkin’s key takeaways?

Inflation is the source of risk to the US central bank’s mandate.

Although the monetary policy direction is ‘straightforward’, it is best to proceed 'with care’.

The US economy remains ‘remarkably stable’.

Prices face upward pressure from resilient demand and widespread cost increases.

Higher costs are something firms say they will be trying to pass on.

With 'remarkable' earnings, businesses are doing well.

According to bankers, lending pipelines are healthy and demand reaches well beyond artificial intelligence.

Layoff activity continues to be subdued.

Reports reaching me point to widespread cost pressures.

Despite 'bleak' sentiment, consumers are still spending, underpinned by a resilient job market.