Fed’s Barkin eschews forward monetary guidance

Bank of Richmond Federal Reserve (Fed) President Thomas Barkin said on Thursday that he doesn't think it's the right time for offering strong forward guidance in light of uncertainty surrounding inflation, US employment, and the long-term impact of artificial intelligence (AI) on the labor market.

Key takeaways:

Take encouragement from recent job growth, but not hard to imagine possible job losses due to AI.

Nervous about the tails on both sides of the mandate.

Employers outside of software are not yet reducing headcount due to AI.

Longer-term bond-market-based inflation expectations do not look like it has broken out.

Not leaning towards overly focusing on risks to inflation or employment.

Do not feel like today is a time for strong forward guidance.

Hard to reach conclusions on short- vs long-term effects of AI.

Bond yields are still in a reasonable zone.

Wonder if balance between supply and demand in long-term Treasury market has shifted given amount of US supply.

Businesses today are much less confident about their ability to raise consumer prices to recoup costs.

Talked to Warsh on Tuesday but just to get acquainted; trust him as a leader.”