The US central bank is "making real progress" in controlling inflation without causing major damage to the job market, Richmond Federal Reserve President Thomas Barkin said on Wednesday.
Although the best scenario is that inflation falls without a large increase in the unemployment rate and it is not impossible to achieve. References can be made to data that includes persistent job losses and inflation that in six months is now below the Fed's 2% target, Barkin continued.
Barkin did not provide details on monetary policy expectations for this year, or when the right time would be for the Fed to begin reducing the policy rate that has been held flat since July in the 5.25% to 5.50% range. Fed officials at the Dec. 12-13 policy meeting indicated they likely won't need to raise rates again, and Barkin noted that "most policymakers are predicting a rate recovery will begin sometime this year."
However, he said risks to the soft landing remain, including the delayed impact of stronger-than-expected higher interest rates, and also that external shocks or stronger-than-expected inflation make a full recovery to the Fed's target more difficult than expected.
On that basis should be considered the potential for additional rate increases, said Barkin,
