Federal Reserve Governor Michael Barr stated on Wednesday that the US central bank will likely need to deliver additional interest rate hikes to bring inflation down to its target. Barr made these remarks during a speech at a Chicago Fed housing affordability conference, noting that risks to achieving the inflation goal have increased while labor market risks have receded.
The Federal Reserve raised its policy rate to the 3.75%-4.00% range in a unanimous decision last week. Sixteen of the 18 Fed policymakers signaled that at least one more rate hike is probable before the end of the year. Barr's comments suggest he believes at least two more hikes are required, although he did not specify a timeline for when they might occur.
Barr described the recent quarter-percentage-point increase as an adjustment in the right direction, stating that the economy was previously out of position given recent changes. He emphasized that price stability is essential for supporting sustainable, durable growth and maximum employment. This stance contrasts with Fed Chairman Kevin Warsh, who has refused to provide forward guidance on the future path of interest rates.
While Barr's monetary policy remarks were brief, the majority of his speech addressed housing affordability. He noted that high mortgage rates and a lack of supply have worsened the situation. According to the Mortgage Bankers Association, the average rate on a US 30-year fixed-rate mortgage rose to 7.12% last week, surpassing a two-year high.