Financial markets pay a great deal of attention to what Federal Reserve Bank presidents have to say about the broader economy. The reason is simple: “Fedspeak” can offer clues about where the Federal Reserve may be heading on interest rates and other regulatory matters.
What should we make, then of remarks of Richmond Fed President Tom Barkin’s recent speech to the Shenandoah Valley Partnership? That inflation is top of mind at the Fed (obviously). And Barkin sees a path to taming inflation, but it won’t come easily:
…a recession could happen in the process. (emphasis added) If one does, we need to keep it in perspective: No one canceled the business cycle. We are out of balance today because stimulus-supported excess demand overwhelmed supply constrained by the pandemic and global commodity shocks. Returning to normal means products on shelves, restaurants fully staffed and cars at auto dealers. It doesn’t have to require a calamitous decline in activity. Indeed, lower prices may create room for consumers to spend again. As for financial markets, they are not the economy. And baselines matter. Equities are down this year but still significantly up from pre-pandemic levels. We might soon have the same conversation about houses were prices to slip after two years of extraordinary gains.
Most importantly, moderating demand has a higher purpose squarely in our mandate: containing inflation. If there is any lesson that’s been relearned in the last year, it is that inflation is painful, and everyone hates it.
All of which boils down to this: “the Fed is committed to getting inflation under control.” Some may think brighter days are just ahead. They may be right – or they may be suffering from an overdose of “hope-ium.” From the Fed’s perspective, the fight against inflation is really just beginning. And it won’t end won’t nearly as soon as some market pundits think or politicians desire.
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The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
The way to do it is to vote Republican, they will install people who speak plain English
It will be the retailer CEOs refusing to
Lower the prices for as long as possible
It’s pretty simple really. During a democrat run Washington like we have today, assume everything they say is a lie. You will be 99.999999999999999% correct.
CORRUPT BIDENS = CORRUPT FBI = CORRUPT DOJ