Richmond Fed President Thomas Barkin said in a Bloomberg TV interview over the week end that “we are going to see an extremely strong year and I think that strong year is going to lead to price pressures.. But he noted policymakers “haven’t seen” unwanted inflation yet. Also, “our guidance suggests we would be raising rates were inflation to spike past our targets.”
Barkin also attributed the recent rise in treasury yields to brightening economic outlook. “Many of the days where there have been movements have been days where you’ve had really good news on the vaccines or really good news on fiscal stimulus,” he said. “To the extent that yields are responding to the economy, I think that’s what you want them to do.”
In the remarks at a Credit Suisse conference later, he said, “While there are no immediate signs of a U.S. debt crisis, we should be wary of diminishing our fiscal capacity to respond aggressively to the next crisis. Once the economy is on stable footing again, it will be important to take steps to get our fiscal house in order.”
