Fed Governor Anticipates More Rate Hikes Due to Inflation

Michael Barr, the governor of the Federal Reserve (Fed), defended new interest rate increases, warning that high energy prices and rising investment in artificial intelligence have diverted progress toward the U.S. central bank's 2% inflation target. In a speech before the Detroit Economic Club, Barr mentioned, "I still do not see a clear trend toward a timely return to 2.0%." Barr emphasized the need to readjust policies to balance the risks of its dual mandate. Markets expect the Fed to implement another quarter-point increase at its meeting on October 27 and 28. Barr indicated that additional policy adjustments are likely to ensure that inflation is reduced to the target in a timely manner. He also mentioned that GDP growth could accelerate slightly for the remainder of 2026, driven by business investment and consumer spending. John Williams, president of the New York Fed, stated that there is time to assess economic data before deciding on new rate hikes, suggesting that another increase is likely before the end of the year.

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