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Fed's Barkin: Focus is now on balancing the Fed's goals

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Fed's Barkin: Focus is now on balancing the Fed's goals

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New update 2025.09.26 22:16
Fed's Barkin: Focus is now on balancing the Fed's goals

update 2025.09.26 22:16

Richmond Federal Reserve President Thomas Barkin said on Friday that he saw limited risks of a sharp increase in either unemployment or inflation, which he argued would allow the Fed to balance its dual mandate as it considers further interest rate cuts.

Key Quotes

Reason to think there is limited risk of both a big rise in unemployment or a big rise in inflation.

Labor market may be weakening, but supply of workers is also growing more slowly.

Firms want to pass along increased costs including tariffs, but push back from consumers may limit how much that can happen.

Fed now is focused on balance between its goals.

Recent rate cut should help job market while keeping pressure on inflation that remains above target.

Fed FAQs

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed's 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials - the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed's weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.


Date

Created

 : 2025.09.26

Update

Last updated

 : 2025.09.26

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