By Matt Grossman
Federal Reserve governor Michael Barr foresees holding interest rates steady "for some time" and would be reluctant to support cutting them unless inflation is sustainably declining, he said in a speech Tuesday afternoon.
Speaking at a conference in Phoenix, Barr said that inflation is still "notably above" the Fed's 2% target, with contributions from faster price increases for goods as well as persistent inflation for non-housing services.
Barr said while he is optimistic that tariff effects will wane, he wants to see firm evidence before voting to ease policy.
"While I am hopeful that inflation will fall as the effects of tariffs on prices wane later this year, I would like to see evidence that goods and services price inflation is sustainably retreating before considering reducing the policy rate further," Barr said.
The Iran conflict brings additional risks, Barr said, adding that higher gasoline prices are likely to be especially painful for low- and moderate-income families.
After three straight cuts to end 2025, the Fed held rates steady at 3.5% to 3.75% at both of its two meetings so far this year. At the Fed's meeting last week, most officials' forecasts indicated an openness to further cuts later this year.
But over the past week, markets have been leaning against that presumption, with traders tilting toward bets that hikes, not cuts, could be the Fed's next move. These bets have shifted rapidly on fast-moving developments in the Middle East, with a focus on how the closure of the Strait of Hormuz can crimp global supplies of oil--threatening potentially both higher prices and slower growth.
Write to Matt Grossman at matt.grossman@wsj.com
(END) Dow Jones Newswires
03-24-26 1844ET
