Fed's Barkin says monetary policy is in a delicate balance as he waits for new data

Richmond Fed President Tom Barkin said policy faces a delicate balance between rising unemployment and still-high inflation, and he noted last year’s 75 basis points of easing has put interest rates near estimates of the neutral rate.

Tom Barkin, president of the Federal Reserve Bank of Richmond, said the outlook for monetary policy is in a delicate balance because unemployment is rising while inflation remains elevated. He noted that last year’s 75 basis points of policy easing has placed interest rates within the range of estimates for the neutral rate and likened that easing to taking out insurance. Fed officials remain divided on how much to lower rates this year and a growing number favor holding policy steady until more data arrive. Barkin said the resumption of official data after the government shutdown should give policymakers a clearer picture in the coming weeks. Key points: - Barkin described monetary policy as being in a "delicate balance" between rising unemployment and still-high inflation. - He said last year’s 75 basis points of easing has put rates near estimates of the neutral rate and compared that move to insurance. - Fed officials are divided on further rate cuts, with an increasing number favoring a pause until more data are available. - Barkin expects that the return of official economic data will allow policymakers to assess conditions more clearly in the weeks ahead. Summary: Barkin’s remarks emphasize that policymakers must weigh progress on both employment and inflation when setting policy and that views on near-term rate moves are split. Officials expect incoming official data in the coming weeks to inform their judgments and determine the timing and size of any future adjustments.