Tom Barkin, Interview: Bloomberg TV

Inflation

Regarding the January’s CPI print earlier in the day: “It’s about as expected. Inflation’s normalizing, but it’s coming down slowly and I just think there’s going to be a lot more inertia, a lot more persistence to inflation than maybe we’d all want.”

“We’re going to get a PCE at the end of the month, another CPI before the next meeting, and then I think as the meetings go on this year, we’ll see what happens to inflation. If inflation settles, maybe we don’t go quite as far, but if inflation persists at levels well above our target, maybe we’ll have to do more.”

Fed Funds

“I do think what we are now in a position to do is to react to multiple months of data as they come in. We may or may not choose to take rates up further if inflation continues to persist, but we’ll have to see what happens.”

Pause

“Well, I think there’s a very good case for leaving rates higher for a longer period of time to allow that tightening to hit. I do think the lesson in the ’70s was very clear, which is don’t give up too early.”

Jobs

“Well, the biggest surprise has been the jobs market. I mean, the jobs report we got a couple weeks ago was quite significant and much stronger than what I had anticipated. And so the question in my mind’s going to be, are we going to get another one like that in February or are we going to get something in February that revises, corrects, moves it down? So I think that’s really the key thing I’m looking at in terms of growth.”

Balance Sheet

Regarding QT: “I think we did a bunch of actions we thought important at the time in terms of stimulus and supporting the markets back in 2020. We’re now trying to unwind that. I think our primary tool is the rate tool. It’s not the balance sheet tool. The objective is to unwind the balance sheet expansion that we did and do it in a way that doesn’t change any focus on our primary tool, which is the rate tool. You guys still seem to be focused on the rate tool, so I think so far so good.”

“If you believe that adding to the balance sheet does something, then you’ve got to believe that shrinking the balance sheet does something else. So I’ve got no question about that. I do believe that on both the expansion side and the reduction side.”