Fed’s Barkin: Inflation fight may lead to downturn

The Federal Reserve’s (Fed) fight against inflation may lead to a downturn in the United States (US) economy but that is a risk that the Fed will have to take, Richmond Fed President Thomas Barkin said on Wednesday, as reported by Reuters.

Key takeaways

“Fed rate hikes challenged by artificial elements in the current economy including high consumer savings, lack of labor supply.”

“Not waiting for those issues to settle on their own, doing what it takes to return inflation to 2% target.”

“Given the experience of the 1970s, Fed can’t let inflation fester and expectations rise.”

“The US could continue to face labor constraints going forward.”

“Supply chains improving but slowly and inconsistently.”

Market reaction

The US Dollar showed no immediate reaction to these comments and the US Dollar Index was last seen rising 0.35% on the day at 110.00.