Fed Official Hints at More Rate Cuts Despite Recent Pause

The Federal Reserve has reduced interest rates for three consecutive months since beginning its rate-cutting cycle in September.

After lowering rates by 50 basis points in September and 25 basis points in both November and December, the Fed opted to keep the rates unchanged in January, signaling a pause in the cycle.

Despite this pause, Richmond Fed President Thomas Barkin has suggested that the possibility of further cuts remains on the table. In an interview with Bloomberg, Barkin emphasized that although the Fed held rates steady in January, it remains open to future rate reductions, given the current economic conditions.

Barkin expressed that he does not see any immediate signs of the economy overheating. He believes the policy rate is still somewhat restrictive, and further adjustments will depend on how the economy and inflation develop, particularly amid the growing uncertainty surrounding President Donald Trump’s policies.

Barkin pointed to challenges such as potential tariffs, regulations, and immigration policies, all of which contribute to economic uncertainty. He also predicted a rise in consumer spending but a decline in investments by 2025. While he expects inflation to ease over the next year, he maintains that the possibility of additional rate cuts is still likely if conditions remain favorable. However, he reiterated that the Fed would only consider rate hikes if the economy shows signs of overheating.