Barkin says Fed's rate hike reflects inflation risk outweighing jobs risk

The Richmond Fed president's comments follow last week's quarter-point increase, the Fed's first rate hike since 2023.

Federal Reserve Bank of Richmond President Thomas Barkin said the central bank raised interest rates last week because risks to inflation now outweigh risks to the labor market.

The increase, a quarter of a percentage point, was the Fed's first rate hike since 2023.

Barkin's remarks track comments from other officials. Boston Fed President Susan Collins said a somewhat more restrictive policy stance will help bring inflation back to target, and that the odds have risen of inflation staying notably above the Fed's 2% goal. Collins said persistent inflation and renewed conflict in the Middle East supported her vote for the hike. Fed Vice Chair Alberto Musalem said business contacts are planning price increases near 3%, even after stripping out supply-side pressures, and that the Fed likely needs to raise rates further to curb inflation. Chicago Fed President Austan Goolsbee has said the Fed's projections may not be enough if the inflation pressure turns out to be driven by demand, though he added the hike would not reverse the rate cuts made in 2025.

Gold held near $4,375 an ounce as of Sunday, as traders weighed the Fed's next move. Barkin's framing suggests the hiking cycle is not over even though last week's increase calmed markets briefly, a stance that keeps rate expectations elevated and supports the current backdrop of sticky yields and firm gold prices.