Nov 17, 2023
Fed’s Barr Says Recent Data Reinforce View That Rates Are Near Peak
, Bloomberg News
(Bloomberg) -- Federal Reserve Vice Chair for Supervision Michael Barr said policymakers are likely at or near the end of their campaign to raise interest rates as inflation continues to cool, echoing remarks he made last month.
“We’re likely at or near the peak of where we need to be in terms of having a sufficiently restrictive stance of monetary policy that will sustainably bring inflation down to 2%,” Barr said Friday during a moderated discussion with Bloomberg’s Tracy Alloway and Joe Weisenthal, hosts of the Odd Lots podcast, at an event in New York hosted by The Clearing House.
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“I think the recent economic readings reinforce my view that that is probably correct,” Barr said. He added that the risk of tightening policy too much had become more balanced with the risk of not doing enough to tame price pressures.
Investors expect the Fed is finished with its rate-hiking campaign and will hold rates steady in a range of 5.25% to 5.5% when officials meet next month, amid recent reports showing inflation and some economic activity is cooling. Fed Chair Jerome Powell and his colleagues have said the US central bank can proceed carefully as officials assess the evolving outlook, suggesting policymakers aren’t inclined to raise rates in December.
In the wide-ranging interview Barr also said that he supports a Securities and Exchange Commission plan to expand central clearing for Treasuries. In September 2022, the SEC proposed giving clearinghouses — which sit between buyers and sellers and ultimately backstop the transactions — a much bigger footprint in the market.
Read More: Hedge Funds Facing Tighter SEC Clearing Rules for Treasuries
“I think that the SEC’s move to toward central clearing of Treasury securities might be an additional appropriate next step,” said Barr. He added that the plan could help support the market in times of stress.
--With assistance from Joe Weisenthal, Tracy Alloway and Ben Bain.
(Updates with comments on Treasury markets in final two paragraphs)
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