(Reuters) – Richmond Federal Reserve Bank President Thomas Barkin said on Friday that he did not have second thoughts about the U.S. central bank’s decision earlier this week to raise its main interest rate by 25 basis points.
“Inflation is high. Demand hadn’t seemed to come down. And so, the case for raising was pretty clear,” Barkin said in an interview with CNN published on their website.
The Fed raised its benchmark overnight interest rate to the 4.75%-5.00% range on Wednesday, despite recent banking turmoil that had scrambled expectations of what the central bank would do.
While Fed Chair Jerome Powell said at a press conference on Wednesday that policymakers had considered a pause in light of the banking stresses, Barkin appeared less concerned.
“For me, the question was: Do you see such stresses happening that you felt like you really had to pull back and learn more?” said Barkin. “It felt very stable by the time we got there. So, the conditions were right to do monetary policy the way we want to do monetary policy.”
Fed policymakers overall did, however, recast their outlook from a hawkish preoccupation with pricing pressures to a more cautious stance to account for the fact that a tightening of credit conditions resulting from a change in banks’ behavior may have the equivalent impact of the Fed’s own rate hikes.
That said, Barkin added that he was maintaining his focus on bringing down inflation, which is still running at 5.4% by the Fed’s preferred measure, far above the 2% target rate.
“People really want us to get control of inflation. That’s what they want us to do. We’re the guys charged to do it,” Barkin said.