Inflation isn't done: Interest rates likely to rise more, Fed Governor Michael Barr warns

On 29 September, Federal Reserve Governor Michael Barr gave a warning. He said interest rates would likely rise more. This is needed to slow down inflation, he said.

Barr said the same thing last week, too. According to him, the economy is doing well right now. So, slowing inflation is now the bigger worry. Fed officials are focusing more on this problem.

“In my base case, further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion,” Bloomberg quoted Barr as saying.

“We want to support sustainable, durable growth in support of maximum employment, and price stability is crucial to that,” he added in remarks prepared for a Detroit event.

According to Barr, inflation remains some way off of the central bank’s 2% target.

“I don’t yet see a clear trend toward a timely return to 2%,” Barr said.

“While inflation is significantly above the FOMC’s goal, strong business investment and resilient spending by consumers is supporting a solid labor market,” he added.

In September, Fed officials voted together to raise interest rates, for the first time in three years. The rate now stands between 3.75% and 4%.

After the decision, officials also shared new rate forecasts. Most officials expect one more hike this year. Investors also expect rate hikes in October. Another hike could come in December as well.

Barr called the economy’s growth pace solid right now. He expects growth to speed up further soon. Low unemployment should help this growth continue.

(This is a developing story. Check back for more details.)