Tom Barkin, Interview: Bloomberg TV

Fed Funds

“Right now, inflation expectations seem to have stayed stable and we’ve taken rates up now almost to 4.00%, so if inflation stays high we’ll keep doing what we need to do on rates.”

Restrictive

“The way I think about is, it’s helpful to be somewhat more cautious as you’re in restrictive territory, because you know what you’re doing is going to affect things somewhere out in the future.  That’s different than not moving.  So, I just think, it’s a better risk management approach to move a little slower as you collect the data.”

Terminal Rate

“I try hard not to focus on any individual number.  What I do think is that, as we see the inflation prints come in, we’re going to have to react.  And I don’t see that there’s any particular number that I focus on.  I focus on demand and I focus on inflation and what we’re going to have to do to get those down.”

“The Fed can’t really operate well with stop and go policy.  The mistake is to let your foot off the break too soon.  And, the message I’ve learned from his work and that of others is you’ve gotta take inflation, you’ve gotta get it under control and you’ve gotta make sure that you’ve got it under control before you do any talk of loosening.”

Can see the rate going up and staying high in 2023 and 2024? “Sure.  It depends a lot on what we’re seeing on the inflation side.”

Inflation

“Well, we got a welcomed CPI last month.  It’s the first one in ages that was lower than forecast.  But I take your point.  I think if you took food and gas and shelter out of CPI, you actually had inflation being negative, but of course the things that matter to people are food and gas and shelter.  So, unless we’re able to get the core of what matters to people down to a level that’s in line with our target, I think we’re going to say the job’s not done.”

Balance Sheet

“We’ve launched the balance sheet process.  So far so good, from my standpoint.  I think the idea is to try to send monetary policy messages through rates, not through balance sheet.  I do think that there is some restrictive element when you reduce the balance sheet, but I think the main message to send is rates and I’m hoping that we can normalize the balance sheet in the background and not spend too much time worrying about that.”