Federal Reserve Governor Michael Barr said Tuesday that persistently high inflation could earn his vote for higher interest rates at the next policy meeting.
“If inflation appears not to be moderating sufficiently, then I think we should act decisively to raise rates,” Barr said in prepared remarks at the Second Chance Lending Forum in Washington.
Barr added that if incoming data showed inflation moving toward the Fed’s 2% target, policymakers could afford to take more time before adjusting their stance.
The Fed governor said inflation “remains too high — and has been for over five years,” underscoring growing impatience among central bank officials with the pace of price relief.
Prices have risen 3.7% over the past year on a headline basis, or 3.3% when stripping out food and energy, according to the latest available figures.
Barr expressed concern about “broader price pressures taking hold,” warning that the economy is not yet in a position where the Fed can comfortably stand down on tightening.
Despite his inflation worries, Barr gave the broader economy relatively strong marks, noting that consumer spending and the labor market have held up well under pressure.
“Consumer spending to date has been largely resilient,” Barr said, adding that the job market is “stable, with relatively low unemployment” as the economy absorbs elevated borrowing costs.
Barr also pointed to investment in artificial intelligence technology as a meaningful driver of economic strength, suggesting the expansion retains some durable momentum.
As a Fed governor, Barr holds a permanent vote at every meeting of the rate-setting Federal Open Market Committee, which next convenes September 15 through 16.
Traders were assigning roughly two-in-three odds to a rate increase at the September meeting, according to CME Group’s FedWatch tool as cited by financial media.
The federal funds rate currently sits in a target range of 3.50% to 3.75%, following a series of adjustments as the Fed has worked to bring inflation back under control.
Barr’s comments follow remarks last week from Fed Chairman Kevin Warsh, which markets widely interpreted as tilted toward a rate hike, possibly as soon as the next policy meeting.
Bond markets have also responded to growing tightening expectations, with the benchmark 10-year Treasury note reaching levels not seen since mid-January 2025 on Tuesday.
The convergence of hawkish signals from multiple Fed officials suggests the central bank is actively preparing markets for the possibility of additional rate action in the weeks ahead.
