Barkin: "Inflation Is Too High... Difficult to Be Confident About Returning to 2%"

'Fed's Key Indicator' PCE Rises 4.1%
Highest Since April 2023
Attention on Easing Price Pressures Including Oil Prices

Thomas Barkin, President of the Federal Reserve Bank of Richmond, stated that current inflation indicators are too high and that it seems unlikely for prices to return to target levels without the influence of monetary policy or other factors. However, he added that there are also signs of easing price pressures, considering recent declines in oil prices.

Federal Reserve Board Headquarters in the United States. Photo by Reuters Yonhap News Agency

According to Bloomberg News, President Barkin made these remarks at the "Aspen Ideas Festival" held in Aspen, Colorado, on the 28th (local time), saying, "The level of inflation is too high."

The U.S. Personal Consumption Expenditures (PCE) price index for May, announced on the 26th, rose 4.1% year-on-year. This is the highest increase in the PCE index, which the Federal Reserve places the greatest emphasis on as an inflation indicator, since April 2023. He analyzed that while the surge in oil prices due to the war in Iran contributed, the upward trend in prices has spread beyond energy to the broader economy.

President Barkin stated, "It is difficult to be confident that inflation will return to 2%—the Fed's target—without the influence of the federal funds rate, the labor market, or other factors that generate disinflation in the opposite direction."

However, he viewed positively the rapid stabilization of gasoline prices as oil prices have fallen following the ceasefire between the United States and Iran. Still, he pointed out that strong U.S. consumer spending remains a challenge to bringing inflation down to 2% in a consumption-driven economic structure.

He also explained that he is monitoring other factors contributing to inflation, including the build-out of artificial intelligence (AI) infrastructure. He said it will be necessary to observe how the economy unfolds over the next few months to determine the right policy path.

President Barkin also expressed concern about corporate behavior in the current inflation environment. He said, "Companies set their prices based on the current level of inflation," and added, "This raises concerns that inflation may persist longer than expected." He continued, "For this reason, it is reasonable to keep monetary policy somewhat restrictive."

This content was produced with the assistance of AI translation services.