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Fed's Barkin Backs Gradual Rate Increases as Business Cost Pressures Broaden

By Market Flux···1 min read
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Richmond Fed President Tom Barkin on Thursday signaled support for a deliberate, step-by-step approach to raising interest rates, saying the direction of travel for the Fed is clear while the key question is pace. His remarks came as the Fed's policy rate sits in the 3.75%-4.00% range following a recent hike, with markets watching closely for signals on what comes next.

Barkin highlighted that cost pressures hitting U.S. businesses are broad-based and persistent. He noted that years of elevated inflation have made it easier for companies to justify passing price increases on to customers, and said he is hearing directly from businesses about plans to do exactly that. The comments suggest Barkin sees lingering inflation risks that warrant continued, if measured, tightening.

The broader market backdrop was cautious on Thursday, with equity futures under pressure ahead of key data releases including PCE, GDP, and weekly jobless claims, as well as an ECB rate decision. S&P 500 futures fell 0.4% and Nasdaq futures dropped 1.4%, weighed in part by an 11% drop in Alphabet shares, while the 10-year Treasury yield eased slightly.

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Sources

  1. MrTopStepDAILY GAME PLAN | Thu, Oct 29 8:30 PCE/GDP/Claims; ECB decision; Fed speakers. Futures: ES -0.4%, NQ -1.4%, RTY +0.25%, DJI -0.3%. GOOGL -11%; MSFT +1.7%. 10Y eases. Oil: WTI -0.9%, Brent -0.7%. Lean: defensive; AI earnings/Iran risk. $ES
  2. FinancialjuiceFed's Barkin: The Fed has signaled a gradual approach.
  3. LiveSquawkFed’s Barkin: Fed Has Signalled A Gradual Approach - We'll See What We Learn Over The Next Period - Direction Of Travel Is "Straightforward" For The Fed, The Question Is Pace - A Lot Of Cost Pressures Are Hitting US Businesses
  4. FirstSquawkBARKIN SAYS ON FIGHTING INFLATION, QUESTION IS THE PACE; A LOT OF COST PRESSURES ARE HITTING US BUSINESSES
  5. WallstengineFed Barkin: The AI investment surge has pressured supply chains, and that is inflationary. AI investment is leading to demand side inflation, which is the kind of thing the Fed can lean against.
  6. MRKT_AIYou're losing THOUSANDS of dollars every red folder event you trade without knowing what's priced in. Our co-founder @Capital_Hungry just dropped Macro Masterclass 2. He breaks down: → Why funds position weeks before the Fed → The 6 things he checks before every red folder event → How you read what's priced in before the data drops → What could set off the next repricing in Gold, DXY and NQ The masterclass is FREE.(check the first reply)👇
  7. ReutersFed's Barkin says US central bank's direction 'straightforward,' the question is pace, SiriusXM reports
  8. MaceNewsMacroHEADS UP. ST LOUIS FED'S MUSALEM PREPARED COMMENTS AT SHADOW FOMC COMING UP AT 12:30P FOLLOWED BY Q&A #Musalem #FederalReserve @economy
Show 5 more
  1. CNBCSt. Louis Fed's Musalem: Tighter monetary policy is needed 'soon'
  2. DeItaoneFED'S MUSALEM CALLS FOR INTEREST RATE HIKE SOON AS INFLATION RISKS PERSIST Fed official Alberto Musalem says the Federal Reserve will need to raise interest rates again "soon" to restore price stability. 🔸 Inflation remains too high, with risks still tilted toward further increases. 🔸 Monetary policy and financial conditions remain accommodative, despite modest tightening. 🔸 The US economy and labor market remain strong, providing room for additional tightening. Musalem argues that raising rates sooner and gradually would reduce the risk of more disruptive increases later.
  3. FaststocknewssFED'S MUSALEM: US CENTRAL BANK WILL NEED TO RAISE RATES AGAIN "SOON" Fed's Musalem said moving sooner with rate hikes lessens the risk of a hit to the broader economy, and that incremental changes in rates are better than abrupt ones. • Inflation is still too high and unlikely to ease without Fed action • Risks are still skewed toward higher inflation • The best thing the Fed can do now is restore price stability • Monetary policy is accommodative right now. Overall financial conditions remain accommodative, and are tighter but not by much • Higher long-term bond yields are driven by expected higher policy rates • The broader economy and job market are strong, and inflation expectations have been anchored The Fed held rates at 3.75-4.00% on Wednesday.
  4. Seeking AlphaSt. Louis Fed's Musalem sees further policy firming as needed, and soon
  5. MarketRebelsSt. Louis Fed's Musalem

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