Fed's Barr (voter) says he has particular concern for long-run inflation expectations, adds the longer inflation remains above 2%, the greater the risk that it becomes entrenched

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Fed's Barr (voter) says he has particular concern for long-run inflation expectations, adds the longer inflation remains above 2%, the greater the risk that it becomes entrenched

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On the Newsquawk feed at , 20 minutes before this page.

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Says

  • In a good place to hold rates and assess incoming data.
  • The economy has remained resilient through a series of shocks, but these have complicated the Fed reaching its 2% inflation goal.
  • It makes sense for the Fed to take time to assess economic developments before further policy changes.
  • Extended war could have broad impact on prices and the economy.
  • If the Middle East conflict ends soon, the economic impact could be limited, but broader implications remain if it persists.

Context

Barr's comments reflect a cautious stance on inflation, highlighting the risk of entrenched expectations if inflation stays above 2%. His acknowledgment of the economy's resilience suggests that monetary policy might remain unchanged for now, giving the Fed time to assess incoming data. This sentiment could weigh on risk assets and bolster the USD, especially if markets perceive an extended period of stable rates ahead.

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