NEW YORK— In remarks to a meeting here, Federal Reserve Gov. Michael Barr said that another interest-rate cut is unlikely in the near term, emphasizing the need for policymakers to see clearer evidence that inflation is easing before reducing borrowing costs further.
Barr said it will “likely be appropriate to hold rates steady for some time” while officials evaluate incoming economic data and the broader outlook, speaking in prepared remarks for the New York Association for Business Economics.
“The prudent course for monetary policy right now is to take the time necessary to assess conditions as they evolve,” Barr said, adding that he wants to see goods-price inflation “sustainably retreating” before considering additional rate reductions, provided the labor market remains stable.
‘Significant’ Inflation Risks
In his remarks Barr warned that inflation risks remain significant, noting concern that price growth could stay above the Federal Reserve’s 2% target. While tariff-related pressures that contributed to higher inflation may eventually ease, he said policymakers must remain vigilant.
“There are many reasons to be concerned that inflation will remain elevated,” Barr told the meeting.
He described the job market as stabilized but in a “delicate balance,” cautioning that employment conditions could be vulnerable to negative economic shocks.
As the CU Daily has been reporting, during 2025 the Fed cut its benchmark overnight rate by three-quarters of a percentage point to a range of 3.5% to 3.75% as it sought to support a softening labor market while maintaining enough restraint to bring down inflation. Officials left rates unchanged at their late-January meeting and have signaled hesitancy about further easing.
Thoughts on AI
Separately, Barr also addressed the growing role of artificial intelligence, saying the current evidence suggests it is reshaping workforces rather than causing widespread layoffs, with companies reallocating workers internally. Still, he cautioned that AI adoption could produce short-term labor-market disruptions even if it delivers longer-term economic gains.
Over time, Barr said, AI is expected to boost productivity and living standards, but he added that the technology is going to be quite disruptive.
