Richmond Fed President Tom Barkin said Monday he is content to wait a few more months before deciding if the central bank will become more aggressive due to recent inflation trends.
Barkin said during an interview on Yahoo Finance, that it is very helpful to have a few more months to evaluate.
The Fed decided to slow down, or taper, the pace of its asset purchases earlier this month. The Fed will be finished buying assets in June, as per the pace agreed to on November 3.
The Fed has said it doesn't want to raise short-term rates while it is tapering.
In a few months, Barkin said it might be clear whether inflation is going to come back to normal levels or if the labor market is going to open up.
I think it is important to have time to see where reality is in this economy and if there is need to act. He said that we will do what we need to do.
Two former Fed officials said on Monday that the central bank would have to speed up their efforts to combat inflation.
The Fed is way out of bounds in its reaction to this inflation surge, according to the former Richmond Fed Jeffrey Lacker.
The central bank is late in response to higher prices, according to former New York Fed President William Dudley.
Both Dudley and Lacker said the Fed would probably have to raise short-term interest rates in a range of 3% -- 4% to control inflation.
They are on track to a major policy blunder, Lacker said.
Barkin said he took some comfort in his Yahoo interview because businesses don't expect the price increases seen this year.
Even today, as businesses see higher costs pushing into prices, they are not talking about this lasting year over year, which is what persistent inflation is, according to Barkin.
Barkin said the key question for him is whether more workers will return to the job market or will the shortage of workers continue in recent months?
I am certainly one of those people who thought in September we d have gotten more people in the workforce. We didn't see that. We ll give it a few more months. If we can get COVID behind us, we'll see, Barkin said.
The yield on the 10 year Treasury note TMUBMUSD 10 Y has gone above 1.6% from 1.4% in the past week.