Barkin Highlights Inflation as Major Risk and Emphasizes Need for Cautious Monetary Policy Adjustment

Thomas Barkin, President of the Federal Reserve Bank of Richmond, has identified inflation as the biggest risk to the U.S. economy. He mentioned the need for careful adjustments to monetary policy considering the potential shock to the labor market and has withheld judgment on the interest rate decision for December. After an event in Greer, South Carolina on the 9th, President Barkin told reporters that he has not set a baseline outlook for the upcoming Federal Open Market Committee (FOMC) meeting in December. He stated that he would make a judgment after confirming additional price and employment indicators. President Barkin explained that companies are still facing rising costs and are trying to reflect this in their prices. With U.S. inflation rates exceeding the Federal Reserve's target of 2% for nearly six years, he assessed that the risk of inflation is greater. The market expects the Fed to raise the benchmark interest rate at the meeting on December 8-9. However, President Barkin emphasized the need for caution in policy changes, considering the possibility of worsening employment conditions. He pointed out the uncertainty in the artificial intelligence (AI) industry as a significant risk factor, warning that if AI investments fall short of expectations, it could weaken economic growth momentum. Conversely, he noted that rapid advancements in AI technology could also potentially shock the labor market. According to CoinMarketCap, Bitcoin is trading at $74,803.53, down 1.34% on the day.

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