👀 Ones to watch: Undervalued stocks to buy before they report Q3 earningsSee Undervalued Stocks

Fed's Barkin: can't rely on tightening from long-term rates

Published 10/17/2023, 01:07 PM
Updated 10/17/2023, 01:11 PM
© Reuters. FILE PHOTO: Federal Reserve Bank of Richmond President Thomas Barkin poses during a break at a Dallas Fed conference on technology in Dallas, Texas, U.S., May 23, 2019.  REUTERS/Ann Saphir/File Photo

(Reuters) - Richmond Federal Reserve Bank chief Thomas Barkin on Tuesday said that higher long-term borrowing costs are putting downward pressure on demand but it's unclear how that will affect the central bank's rates decision in two weeks.

"Longer-term rates have moved up, that's certainly tightened financial conditions...the challenge with depending on (long-term) rates is they can move," Barkin told reporters after a speech at the Real Estate Roundtable in Washington, D.C.

Several of Barkin's colleagues at the Fed have in recent weeks said that the rise in Treasury yields over the past few months is doing some of the work to slow the economy that the Fed would otherwise need to do by raising the short-term policy target further. The yield on the 10-year benchmark Treasury note rose to a high of 4.857% on Tuesday after a report showed brisker-than-expected retail sales.

"I understand so little about the long end of the yield curve that I try not to over index them," Barkin said. "I have no idea where rates are going to be three weeks from now, given what's happening globally."

© Reuters. FILE PHOTO: Federal Reserve Bank of Richmond President Thomas Barkin poses during a break at a Dallas Fed conference on technology in Dallas, Texas, U.S., May 23, 2019.  REUTERS/Ann Saphir/File Photo

The challenge right now, Barkin said, is that official data tracking economic growth, retail sales, job growth and even the most recent reading on inflation suggest a lot more strength than what he is hearing when he talks with businesses around his district. "It's hard to square those two," he said.

Asked if that means he'd prefer to leave interest rates in their current 5.25%-5.50% range at the Fed's upcoming, meeting, scheduled for Oct. 31 - Nov. 1, he said, "We'll make the decision at the meeting. We're going to have a good debate, as always."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.