One of the Federal Reserve’s decision-makers says that the risk of an inflationary wave in 2025 is higher than most investors realize.
Speaking with the Maryland Bankers Association in Baltimore, Thomas Barkin, President of the Federal Reserve Bank of Richmond, says he thinks “there is more upside risk than downside risk” to inflation given the possibility of higher wages and other price pressures, Reuters reports.
“I put myself in the camp of wanting to stay restrictive for longer as opposed to the other school, which would be ‘We’re done, so why not take rates down to neutral.'”
The current federal funds rate is 4.33% after a series of cuts from the Federal Open Market Committee (FOMC) that started in September of 2024. The FOMC is scheduled to have its next meeting on interest rates on January 28th.
Barkin says he expects “more upside than downside in terms of growth,” with potentially “more risk on the inflation side…”
He also says that the job market is more likely to “break toward hiring than toward firing.”
A WalletHub survey reveals that inflation is still heavy on the minds of the American consumer. According to the survey, 56% of Americans say inflation is their biggest financial concern for this year.
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