Richmond Fed President: Inflation Risk Poses Greater Threat Than Demand

Richmond Federal Reserve President Tom Barkin stated that inflation poses the greater risk to the Federal Reserve’s dual mandate if the economy continues on its current path. He noted that while demand is holding up, uncertainty about demand requires a measured policy approach, and he did not offer a view on the December rate decision. Barkin also described a divide among consumers, noting that lower-income households are financially stretched while wealthier consumers account for a disproportionate share of spending.

Barkin linked the inflation outlook to both companies’ pricing decisions and household spending patterns, noting that businesses are reporting cost increases and reconsidering whether to pass them on to customers. He outlined two risks connected to artificial intelligence: if AI underdelivers, business investment could weaken; if AI displaces workers, household spending could fall.