#Balkin: Rate cut expectations weaken#

Federal Reserve Governor Barkin recently adjusted his expectations for interest rate declines in a speech. He said he is increasingly recognizing that long-term interest rates may not fall as sharply as previously hoped. While he is optimistic about the economic outlook for 2025, expecting more upside than downside to growth and believing consumer spending growth will keep the economy on a healthy path, he also noted that inflation has not yet returned to the Fed's 2% target and that continued efforts to control inflation are needed. Barkin believes the current labor market balance is more likely to shift toward hiring rather than layoffs, with businesses exhibiting high optimism, while labor supply is unlikely to continue growing strongly. He also predicts that consumers' focus on costs will put pressure on businesses to limit price increases, which will help to dampen inflation. While Barkin is optimistic about the economic outlook, he also stressed that the Fed needs to continue taking steps to control inflation, saying that it does not need to take as restrictive measures as it has in the past to accomplish this.