Fed’s Barkin: A path to cool inflation but a recession ‘is possible

Federal Reserve’s Tom Barkin has crossed the wires and said that the pace of policy change may be making markets ‘skittish’.

He adds that there is a path to cool inflation but a recession ‘is possible’.

“I expect inflation to come down but not immediately, not suddenly and not predictably,” Barkin said in comments to the Rotary Club of Charlotte. “I’d expect inflation to bounce around on its way back to our target.”

Key comments

• Expect inflation to come down but not immediately or predictably.
• Seen early signals of supply easing in freight costs and reports of easier hiring.
• Falling commodity prices should also help in inflation battle.
• Pace of fed policy change may be making markets “skittish”.
• Fed has the tools and the credibility to get inflation under control.
• concerned that post-pandemic changes will make inflation control more difficult.
• Concerned whether US will have financial capacity to fight future downturns.
• Dollar-euro parity not a sign of anything fundamental other than comparative strength of US.

US dollar update

The US dollar improved against its major trading partners early Tuesday in the New York session ahead of the release of key inflation data on Wednesday.