Richmond Federal Reserve President Thomas Barkin expects the Fed to raise its benchmark rate again, but said the size and pace remain uncertain as inflation stays his main concern.
CNBC interviewed Barkin Thursday at the Richmond Fed’s 2026 CFO Summit. He said he could not estimate how large another increase might be or how quickly it could come. A gradual approach made sense, he said, because the outlook is uncertain and policymakers expect more information. Barkin called inflation “the most important risk right now.”
At its latest meeting, the Federal Open Market Committee (FOMC) held its target range at 3.75% to 4%. The committee’s post-meeting statement said it was waiting for additional information before deciding its next move.
CNBC reported that officials largely expected another increase before year-end after approving a quarter-point rise in September. Barkin is not a voter this year but is set to join the committee’s voting roster in 2027, the outlet reported.
Barkin characterized the current policy setting as near neutral. He described neutral as a level where rates neither weigh on economic activity nor encourage it, but said elevated consumption could mean policy is “a little bit accommodative.” He also cited near-record-low unemployment and inflation that remains too high.
Barkin said artificial intelligence is adding to price pressures now but could eventually lift production and help ease inflation. He also said debt issuance to hyperscalers, estimated at more than $500 billion this year, merits attention for possible credit risks. His concern centered on intermediaries that may be taking risks that are difficult to see, CNBC reported.
The market path resembles a UBS forecast for two further increases after September’s move, covered in EconoTimes’ report on UBS’s two-hike outlook. The CME Group’s FedWatch tool put the chance of a December hike at more than 80% and showed another move priced in for 2027.
