Bank of Richmond Federal Reserve (Fed) Chairman Tom Barkin delivered prepared remarks to the Maryland Bankers Association in Maryland on Friday, outlining the Fed’s position on when to cut interest rates again and what conditions are required to do so. The Fed’s Barkin also downplayed the direct and immediate effects of future President Donald Trump’s planned sweeping tariff plan.

The most essential information

Too much uncertainty to include Trump’s policies in forecasts.

We need to expect inflation of 2% or weakening demand to lower interest rates.

The message from businesses is raucous and clear that consumers are becoming more price sensitive.

I am in favor of remaining restrictive for longer, taking into account the possible risk of inflation growth.

Passing on tariffs to prices is not uncomplicated; depends on many factors, including business supply chains and consumer price elasticity.

The condition for reducing rates is again the belief in the return of inflation to 2% or weakening demand.

Companies are more hopeful about the economy, but are concerned about how the upcoming changes will affect their businesses.

I still see underlying core inflation coming down nicely.

The demand for apartments is still very high compared to the supply.

US debt is vast and growing, putting pressure on long interest rates.

I don’t see the need to be as restrictive as the Fed used to be.

The Fed is well-positioned to respond regardless of how the economy develops.

Financial market uncertainty appears to have decreased and the market’s projected policy path appears to be in line with the Fed median.

There is growing awareness that long-term interest rates may not fall as much as expected.

The labor market is more likely to swing towards increased hiring rather than layoffs.

There are some potential risks to inflation.

Inflation is still not back on target and much remains to be done.

The story of 2025 will be less about monetary policy and more about economic fundamentals and perhaps geopolitics.

The underlying outlook for 2025 is positive, with the risks to economic growth outweighing the risks.

As long as employment and asset values ​​remain high, consumers will spend.