Richmond Federal Reserve President Tom Barkin said that interest rates should remain unchanged in view of signs of falling inflation, but he also acknowledged that there is a risk that some price pressure will solidify, which may eventually force policy makers to tighten monetary policy. “A large part of the current high inflation is due to shock factors, and such shocks will eventually subside.” Barkin delivered a speech in Greenville, South Carolina on Thursday, referring to tariffs and the oil impact brought about by the Iran war. But he added that if supply chain difficulties and the boom in artificial intelligence investment continue, it may lead to more lasting pressure on prices. “Inflation has been high for a long time, and there is an upward risk that the price expectations of companies and consumers will rise.” He said, “Once this happens, policies are needed to push inflation back completely to the target.” Barkin did not reveal what policy options he would prefer at the September interest rate meeting. The Federal Reserve kept interest rates unchanged for the fifth time last month. However, more and more officials argue that to achieve the 2% inflation target, a tighter monetary policy is needed.

Richmond Federal Reserve President Tom Barkin said that interest rates should remain unchanged in view of signs of falling inflation, but he also acknowledged that there is a risk that some price pressure will solidify, which may eventually force policy makers to tighten monetary policy. “A large part of the current high inflation is due to shock factors, and such shocks will eventually subside.” Barkin delivered a speech in Greenville, South Carolina on Thursday, referring to tariffs and the oil impact caused by the Iran war. But he added that if supply chain difficulties and the boom in artificial intelligence investment continue, it may lead to more lasting pressure on prices. “Inflation has been high for a long time, and there is an upward risk that the price expectations of companies and consumers will rise.” He said, “Once this happens, policies are needed to push inflation back completely to the target.” Barkin did not reveal what policy options he would prefer at the September interest rate meeting. The Federal Reserve kept interest rates unchanged for the fifth time last month. However, more and more officials argue that to achieve the 2% inflation target, a tighter monetary policy is needed.