Federal Reserve Governor Michael Barr said on Wednesday that further policy tightening will likely be needed to bring inflation back to the central bank’s 2% target.
In prepared remarks for a Chicago Fed housing affordability conference, Barr said risks to the inflation goal had increased while risks to the labour market had receded. He described U.S. economic growth as strong and the labour market as solid, while noting that inflation remains above target and is not moving clearly downward.
His remarks came as the benchmark 10-year U.S. Treasury yield moved above 5% and reached its highest level since 2007. Stronger business-activity data, rising oil prices and expectations of further Federal Reserve tightening contributed to the bond selloff.
Barr did not guarantee a rate increase at a specific meeting. His remarks described his expected policy path, while actual decisions will depend on incoming economic data and the Federal Open Market Committee’s broader assessment.