Richmond Fed President Thomas Barkin reflected upon the lessons of the 1970s, highlighting the risks associated with an early pullback on tackling inflation.
In his exact words, Barkin said, “The ’70s provides a clear lesson: If you back off inflation too soon, inflation comes back stronger, requiring the Fed to do even more, with even more damage. That’s not a risk I want to take.”
Despite acknowledging a softening in demand, Barkin characterizd the situation as “weaker but not yet weak.” Further, he noted the robust labor market conditions and the continued spending by higher-income consumers.
Barkin emphasized his continued skepticism towards a quick return to the 2% inflation target, remarking, “I am still looking to be convinced of the plausible story that slowing demand returns inflation relatively quickly” to the goal.
