Fed confident inflation is on the way to 2% target, supports Fed chair Powell’s approach

Federal Reserve (Fed) Vice Chair for Supervision Michael Barr hit newswires late Wednesday, declaring that the Fed and its core Federal Open Market Committee (FOMC) remain confident that US inflation is on the way to hitting the Fed’s 2% target.

Key highlights

• Data suggests Fed is on a good path, but too early to say if there will be a soft landing.
• The FOMC remains confident that it is on the path towards 2% inflation.
• Fed’s Barr needs to see continued good data before advocating for rate cuts.
• FOMC plans to hold in-depth discussions of balance sheet activity soon.
• Fed balance sheet rundown is operating smoothly, reserves remain plentiful.
• Barr sees no signs of liquidity problems across financial systems, is monitoring conditions carefully.
• January Consumer Price Index (CPI) report is a reminder that the path to 2% inflation will be bumpy.
• Banking system remains resilient, pockets of risk exist in office and commercial real estate.
• January jobs and inflation numbers were stronger than expected, but Fed is looking at the totality of numbers.
• High interest rates are dampening sales and purchases of existing homes.
• Barr referred to Federal Reserve Chairman Jerome Powell’s latest press conference regarding the FOMC’s overall outlook.
• “I fully support what he called a careful approach to considering policy normalization given current conditions.”