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Fed’s Barkin says more data needed before rate hikes are appropriate By Reuters

© Reuters. FILE PHOTO – President Thomas Barkin of the Federal Reserve Bank of Richmond poses for a photo during a lunch break at a Dallas Fed Conference on Technology in Dallas (Texas), U.S.A, May 23, 2019. REUTERS/Ann Saphir

(Reuters) – Richmond Federal Reserve President Tom Barkin said Thursday that the U.S. central banks has opened a pathway for what he believes to be a seamless start to reducing its support for the economy. However, it will take longer to decide when rate increases will be necessary.

Barkin spoke in remarks that were to be given to Forecasters Club of New York. He stated, “We still have much to learn about whether or not recent inflation levels will continue and how long we have to run the labor market before we reach maximum employment.” These questions will be answered as COVID-19 becomes more relaxed, Barkin said.

Fed policymakers think that labor markets are stable enough for them to reduce their crisis-era support of the U.S. economy soon, and likely by the middle or late next month. These were the minutes from Wednesday’s Sept. 21-22 policy conference.

Barkin explained that the language was an “advance notice” central bank gave before starting to cut its $120 million monthly purchases of Treasury securities.

According to Fed forecasts, about half of Fed policymakers expect the central bank to raise interest rates within the next year. The September 22 release showed that only one of them believes this will occur by 2023. The Fed does NOT reveal individual policymakers’ interest rate forecasts or the economic assumptions on which they were based.

Barkin indicated that on Thursday, he wanted to give this information.

He stated that doing so would give a better picture of the individual FOMC member’s reaction functions and, taken together, it could shed more light onto the Fed’s overall response function.

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Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.