Barkin, Richmond Fed President: “Rate cuts have helped defend employment… inflation is in the final stage”

A US Federal Reserve (Fed) official said the rate cuts to date have helped stabilize the labor market, while noting that there is still a final leg to go before achieving the inflation target.

According to BlockBeats, a virtual asset (cryptocurrency) news outlet, Thomas Barkin, president of the Federal Reserve Bank of Richmond, said in remarks on the 3rd that “the Fed’s rate cuts have supported the labor market’s health like an ‘insurance policy’” and that he is “focused on the final stage of bringing inflation back to the 2% target.”

Barkin explained that “a cumulative 1.75%-point rate cut since the fall of 2024 played a role in supporting the labor market in the process of returning inflation to target.” He added that the unemployment rate remains historically low.

However, he maintained a cautious stance on inflation. Barkin said, “Inflation is still about 1% point above the target,” adding that he views it seriously that inflation has persistently exceeded the target since 2021. He stressed that “today’s inflation readings have an important impact on tomorrow’s price trends.”

On the inflation outlook, Barkin projected that “inflation is expected to cool gradually over the coming months.”

He offered a relatively optimistic view of the US economy this year. Barkin said, “Significant stimulus effects from deregulation and tax cuts will emerge,” adding that “companies are also maintaining confidence that demand will persist.”

He also said the recent rise in productivity could help ease inflationary pressures. Barkin explained that “productivity gains have increased companies’ capacity to absorb higher input costs, and as a result, upward pressure on prices is also easing relatively.”