Barkin Backs More Fed Hikes at a Gradual Pace — SkimNews
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- Thomas Barkin said the Fed will need to raise interest rates further, though not by how much or at what pace; he said gradual adjustments make sense given uncertainty in the world and the information still to come.
- Federal Open Market Committee kept the benchmark overnight borrowing rate at 3.75%-4% and said it was awaiting the “accumulation of more information”; officials largely agreed another increase was likely before year-end 2026, following a quarter-point September hike.
- FedWatch showed markets pricing a better-than-80% chance of a December hike, followed by one more increase in 2027.
- Consumption, which Barkin said represents roughly two-thirds of the economy and remains relatively elevated, led him to characterize current policy as close to neutral but “a little bit accommodative.”
- Inflation was what Barkin called the Fed’s “most important risk,” and he said he hoped the September hike and future moves would have some effect on it.
- Artificial intelligence was identified as one source of price pressures, though Barkin said it would eventually spur production and help bring inflation down farther down the road.
- Hyperscaler debt issuance was estimated at more than $500 billion this year; Barkin called it “worth watching” for credit issues and focused attention on intermediaries carrying unknown risks.
Why it matters: For markets, Barkin’s comments make timing—not direction—the central variable: FedWatch prices a better-than-80% chance of a December hike and another in 2027. His assessment that policy is only “a little bit accommodative” places the current 3.75%-4% rate close to neutral rather than restrictive.
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