Fed official says bank should take time before cutting interest rates

By Ovunc Kutlu

ISTANBUL (AA) - The President of the Federal Reserve Bank of Richmond said Thursday that the Fed should take time before starting to lower interest rates.

"Contrary to most forecasts, including mine, the progress on inflation has come while the economy has remained healthy," Tom Barkin said in a speech at The Economic Club of New York.

Barkin, who has voting rights in monetary policy decisions this year, said it is possible for the American economy to return to the pre-pandemic levels "pretty seamlessly."

He added that it is also possible that a soft landing might be "somewhat bumpier" as inflation pressures and demand challenges continue.

A soft landing is where a central bank manages to bring inflation down and cool a hot economy but avoids a recession.

"That’s why I think it is smart for us to take our time," said Barkin. "Looking forward, I am hopeful but still looking for more conviction that the slowing of inflation is broadening and sustainable.

"No one wants inflation to reemerge. And given robust demand and a historically strong labor market, we have time to build that confidence before we begin the process of toggling rates down," he added.