Fed's Barkin: Driver of higher rates "seems to be" vaccine and economic optimism
Comments from Barkin
- There will be price pressure in the spring, given pent-up demand and excess savings
- We will be watching to see what service-sector jobs come back and if they don't, if those people can be redeployed
- I watch carefully survey based and market-based inflation expectations but those are still short of where they should be
- At the longer end of the curve, it depends a lot of the driver. If they driver is elevated inflation expectations then it's something to address
- If the driver of higher rates is "as it seems to be" vaccine and economic optimism then "it's a natural reaction"
- No indication that inflation expectations are moving higher
- I haven't seen evidence of rising yields affecting investment
- My forecast hasn't changed but the uncertainty range has narrowed
We might be in a situation where yields continue to creep higher until the Fed does something about it.
We will hear from Bostic, Mester and Kashkari in a bit over an hour. The topic is "racism and the economy" though so it might be a dud.