Federal Reserve Bank of Richmond President Thomas Barkin said Thursday that how businesses and consumers respond to ongoing economic shocks will determine whether the central bank can maintain steady interest rates or needs to consider raising them.
Speaking to an economic group in Raleigh, North Carolina, Barkin said the Fed's decision to hold rates steady at its last meeting "made sense" as policymakers gathered more information on jobs and inflation. The central bank is monitoring developments including high oil prices and the rollout of artificial intelligence technology.
"It made sense to give ourselves time," Barkin said, adding he expected that in coming months the Fed could see further developments that "pressure the employment side of our mandate, the inflation side of our mandate, or conceivably both."
A growing number of Fed policymakers at the April meeting felt a rate hike might be needed to address inflation that has been rising due to high energy costs, an investment boom around AI, and resilient household consumption.
