Barkin Sees More Fed Rate Hikes Coming, Just Not All at Once

Thomas Barkin isn't done tightening. The Richmond Federal Reserve president said Thursday he expects the central bank will need to push interest rates higher again, though he's keeping the door open on how far and how fast. Speaking with CNBC's Steve Liesman at the Richmond Fed's 2026 CFO Summit, Barkin framed the direction as obvious and the pace as the real puzzle.

His reasoning is blunt: unemployment sits near record lows while inflation is too high. That combination, he said, makes the path pretty straightforward, leaving only the question of pace. Gradual, in his view, fits a world full of uncertainty and a steady stream of new information, and he called it a pace that still makes sense to him.

The comments land a little more than a week after his colleagues voted to hold the Fed's benchmark overnight borrowing rate in a range between 3.75% and 4%. Barkin doesn't vote on the rate-setting Federal Open Market Committee right now, but he gets a vote in 2027. The committee's post-meeting statement said officials want to see the accumulation of more information before deciding their next step. When they approved a quarter-point hike in September, officials largely agreed another increase was likely before the end of 2026.

Traders are already leaning that way. Markets are pricing a better than 80% chance of a hike in December, followed by one more move in 2027, according to CME Group's FedWatch tool. Barkin sees current policy sitting close to neutral, the level that neither restrains nor boosts growth, and suggested the economy's still-elevated consumption makes the case that things are a little accommodative.

Inflation is the biggest risk on his board right now, and he hopes September's move plus whatever comes next will leave a mark on it. Artificial intelligence is feeding some of the price pressure, he said, though he expects it to eventually lift production and help pull inflation down. He also flagged the flood of debt issuance to hyperscalers, estimated at better than $500 billion this year, as something worth watching for credit trouble. His worry isn't the giants minting cash from their core businesses, but the intermediaries in between taking on risks nobody can quite see.