Fed's Barkin: Rate hike direction is clear, AI risks make policy pace require more caution.

November 10 — Richmond Fed President Tom Barkin's remarks in South Carolina signaled that interest rates still need to rise, while emphasizing that the pace of rate hikes must be prudent. He spoke that day to the Greater Greer Chamber of Commerce and will become a voting member of the Federal Open Market Committee in 2027.

Barkin said inflation has been above the Fed's 2% target for nearly six years, and the risks to the dual mandate are currently concentrated on the inflation side. Corporate profits have been strong, consumers continue to spend, and the unemployment rate has stayed at or below 4.5% for a record length of time. He expects consumer spending to remain resilient through the end of the year, with the market widely expecting a strong holiday shopping season, but how long the strong consumption momentum can last remains a question. Barkin also focused on the demand changes that the AI boom may bring. He believes that if the technology underperforms expectations, business investment could contract, stock prices could fall accordingly, and consumption supported by asset appreciation could also retreat.