FED’S BARR SIGNALS RATE HOLD AS INFLATION RISKS LINGER

Michael Barr said it’s prudent for the Federal Reserve to take its time and review incoming data before making any policy changes.

Barr wants clearer evidence that inflation is moving back to the 2% target, warning there remains a “significant risk” price pressures could stay above that level — even though further cooling is reasonable to expect.

He described the labor market as balanced and stabilizing, but still vulnerable to shocks.

On AI, Barr said it should boost long-term productivity and living standards, but is unlikely to justify lower interest rates. While policymakers should be prepared for labor-market disruption, there’s little evidence so far that AI is increasing unemployment.

Overall, the outlook suggests the Fed will hold rates steady for some time.