Richmond Fed's Barkin expects more rate hikes, favors a measured approach

What Barkin said, and why

Speaking with CNBC at the Richmond Fed's 2026 CFO Summit, Thomas Barkin said he expects the central bank will need to raise rates further, though he does not yet know how far or how fast. With "unemployment's near record lows, and inflation is too high," he said, the direction is clear, adding the real question is the pace. He also said "gradual makes sense" when uncertainty is high and more information is on the way.

His comments arrived just over a week after policymakers kept the benchmark rate at 3.75% to 4% following a quarter-point increase in September. The Federal Open Market Committee said it is waiting for the "accumulation of more information" before deciding next steps. Officials, meeting in September, signaled broad consensus that one more hike would probably occur before 2026 concludes. Barkin does not have a vote on policy now but will in 2027.

Where policy stands

Barkin said policy is close to neutral, the level that neither pushes growth faster nor slows it. He explained that if policy were truly restrictive, consumption, which makes up about two thirds of the economy, would be under more pressure, and "that's relatively elevated," which "would make the case that we're a little bit accommodative."

Markets reflect the bias toward tighter policy. The CME Group's FedWatch tool shows better than an 80 percent chance of a December hike and one more move in 2027.

Market shifts and policy uncertainty make smart tools more valuable for long term investors. We're hosting our first ever investor livestream on 11/17 to show you how to use ChatGPT and Claude to invest like a pro, hosted by Briefs Finance CEO Jaspreet Singh. Save your seat.

Inflation, AI, and credit to watch

Inflation "is the most important risk right now ... and I hope that our move in September and whatever else we might choose to do in the future will have some impact on inflation." He said artificial intelligence is one source of near term price pressure, though over time it should lift productivity and help cool inflation.

On credit, Barkin pointed to debt issuance tied to hyperscalers that is estimated this year at more than 500 billion dollars as "worth watching." He noted it is "pretty hard to convince yourself that some of these big hyperscalers who are generating so much cash from their core businesses aren't good credits," and focused his concern on hidden exposures among middlemen: "You do wonder where in the intermediary sector is the biggest risk."

Why it matters for your portfolio

The Fed's bias is toward doing more, but at a slow walk, not a sprint. In plain English: higher for longer stays in play while officials wait for more data, inflation remains the swing factor, and credit pockets linked to hyperscaler financing bear watching. Rate sensitive corners and intermediary risk are the pressure points to monitor as the path unfolds.

Thoughtful use of new technology can help investors find clearer signals in noise. On 11/17, our CEO Jaspreet Singh goes live for our first ever investor livestream on how to use ChatGPT and Claude to invest like a pro. Register to join him.