By Howard Schneider
WILMINGTON, North Carolina (Reuters) – The U.S. central bank’s half-percentage-point interest rate cut last month was an acknowledgement that its policy rate was “out of sync” with where the economy stands, but shouldn’t be taken as a sign that the battle with inflation is finished, Richmond Federal Reserve President Thomas Barkin said on Wednesday.
With inflation falling and unemployment around what is considered its long-term sustainable rate, “the number that now seemed out of sync was the fed funds rate, which no longer needed to be as restrictive given the progress that’s been made,” Barkin said in remarks prepared for delivery to a University of North Carolina Wilmington economic conference.
Projections of a further half percentage point of Fed cuts over the rest of the year further “takes a little bit of the edge off,” he said.
Barkin, a voter on the Fed’s interest rate policy this year, supported the half-percentage-point cut delivered by the U.S. central bank on Sept. 18.