Fed's Michael Barr Says Additional Rate Increases Are Likely Needed

Federal Reserve Governor Michael Barr said additional increases in the benchmark interest rate will likely be needed.

Walter Bloomberg and other outlets reported that Barr, in prepared remarks for an event in Chicago on September 23, said "further rate adjustments will likely be necessary" to bring inflation back to the Fed's 2% target in a timely way.

Barr said the Fed had taken an important step with its latest rate increase and that he supported the move. Given changes in economic conditions, the central bank had not been in the right position, he said. The latest increase moved policy in the right direction.

The Fed raised its benchmark rate by 0.25 percentage point on September 16. It was the first rate increase since July 2023.

Barr said risks surrounding the labor market had eased, but risks to achieving the Fed's inflation target remained. Monetary policy needed to be recalibrated to reflect the balance of risks around the central bank's mandated goals, he said.

Meanwhile, U.S. mortgage rates have continued to rise as the Fed maintains a tightening stance. The average rate on a 30-year fixed mortgage jumped to 7.12% on September 23, the highest since May 2024. Total mortgage applications in the U.S. recently fell to their lowest level in 15 months.