TechFlow News, February 3: Richmond Fed President Thomas Barkin stated on Tuesday that the Federal Reserve’s rate cuts to date have helped “insure” the health of the labor market while the central bank works to complete the “last mile” of returning inflation to its 2% target. Barkin noted that the cumulative 175 basis points in rate cuts since last autumn “provide a degree of insurance for the labor market as we strive to complete the final stage of bringing inflation back to target.” He pointed out that the unemployment rate remains at a historically low level, while inflation currently runs about one percentage point above the target—but is expected to decline over the coming months.
“Inflation remains above our target. It has been so since 2021, and I take this persistent deviation very seriously—regardless of its ‘causes.’ Today’s inflation data significantly influence tomorrow’s inflation,” Barkin said. He expects the economy to remain resilient through 2026, buoyed by “significant stimulus” from deregulation and tax cuts, with businesses maintaining confidence in sustained demand. Recent productivity gains will also help curb inflation, as “firms are better able to absorb higher input costs, thereby easing upward pricing pressures.” (Jinshi)
