Barkin Warns of Risk of High Inflation Becoming Entrenched

Thomas Barkin, President of the Federal Reserve Bank of Richmond, recently warned that it may take time to alleviate price shocks and that there is a risk of high inflation becoming entrenched. Speaking at an event in Baltimore on the 22nd, he stated that while the factors driving inflation may dissipate over time, the current high level of inflation poses a risk to future inflation. The Federal Reserve raised its benchmark interest rate by 0.25 percentage points last week, adjusting it to a range of 3.75% to 4.00%, the first increase in over three years. President Barkin refrained from making a judgment on whether further rate hikes are necessary, emphasizing the need to monitor future economic conditions. He assessed that the U.S. economy and labor market are robust and anticipated that price pressures from rising energy prices and tariffs would ease somewhat. However, he added that the pace of demand suppression and the extent of economic burdens need to be confirmed in the future. President Barkin presented two scenarios regarding the inflation trajectory, warning that while there is a possibility that inflation could decrease again in the short term, it could also persist more stubbornly.