Richmond Fed’s Barkin Says he Expects More Rate Hikes But Unsure About How Many or When

Richmond Federal Reserve President Thomas Barkin said he expects the central bank to continue hiking rates, but is unsure about the pace or the amount of such decisions.

Speaking to CNBC, Barkin noted that "unemployment is near record lows, and inflation is too high," making the decision "pretty straightforward."

"The question, of course, is pace," he added. "Gradual makes sense if you think there's uncertainty in the world, and if you think that there's information you're going to get in the period. And I think that's still a pace that makes sense to me."

The comments come a little after the Federal Reserve kept rates steady. Barkin doesn't vote in this year's Federal Market Open Committee but will do so in 2027.

Fed Chair Kevin Warsh said in the press conference after the meeting there are signs that financial conditions have tightened over the weeks since the central bank hiked interest rates in September.

Warsh said that "we have started to see some changes in financial and credit conditions; they have tightened for some businesses and households, much as we would expect."

"Market participants are becoming somewhat more discerning in their capital allocations," he added. Warsh went on to say that he won't describe current conditions as broadly "tight" but they are helping to create a path toward lower inflation.

In its statement following the meeting, the Federal Open Market Committee claimed that "economic activity is expanding at a strong pace" and "while uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient."

"Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little," the committee added.

However, it also noted that "inflation remains elevated" and the central bank will use upcoming information to " determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2 percent goal." "The Committee will deliver price stability," the document concluded.

September's inflation rate was in line with expectations, with odds of a rate hike now standing at 76.2%, according to the CME Group's FedWatch tool.

The personal consumption expenditures price index climbed a seasonally adjusted 0.5% last month. The annual rate stood at 3.6%, slightly below the Dow Jones consensus but well above the Federal Reserve's 2% goal.

The core PCE index, which excludes food an energy, gained 0.3% for the month and 3.1% for the year, in line with the consensus.

Gasoline and other energy goods largely led the increase, with consumers spending $45.7 billion more compared to last year as the war in Iran keeps prices elevated with no signs of abating. Transportation services, housing and utilities and food services and accommodation followed with less than $20 billion each.