Richmond Fed President Tom Barkin said today the outlook for US monetary policy is in a “delicate balance,” as policymakers weigh still-elevated inflation against signs of rising unemployment. Speaking on the policy outlook, Barkin stressed that conflicting pressures mean “both sides of the Fed’s dual mandate bear watching.”
Barkin noted that last year’s 75 basis points of easing have brought interest rates “within range of neutral,” likening the move to taking out insurance against downside risks. Inflation has cooled but remains above target, while unemployment is still low by historical standards. However, he cautioned that policymakers do not want labor market conditions to deteriorate much further.
Despite near-term uncertainty, Barkin said he is optimistic on the 2026 outlook. He expects last year’s elevated uncertainty to ease, boosting confidence among consumers and businesses. Fiscal changes, deregulation efforts, and the delayed impact of monetary easing are all expected to provide meaningful support to economic growth.
