Barkin noted that rate increases now have taken on a policy in which the central bank has switched from having its foot on the gas pedal to the brake.
This new phase means Fed policymakers will “pump the brakes sometimes” and “act a little bit more defensively,” he told the business news outlet.
“I’m ready to do that, and I think the implication for that is probably a slower pace of increases, a longer pace of increases and a potentially higher point,” he continued.
However, Barkin admitted that “we need to get inflation down to target and we need to do whatever we need do with rates to get inflation back to target.”
“It is entirely conceivable to me, we would end up over 5 percent,” he added. “But to me, that’s not a plan, that would be an output of our effort to try to keep inflation under control.”
Meanwhile, Collins expressed similar sentiments on both consumer prices and rates.
“Policy has moved expeditiously into restrictive territory, but there is more work to do. In this next phase for policymaking, my focus is shifting from raising rates rapidly to determining the level that the funds rate must reach to be sufficiently restrictive to achieve the desired outcomes,” she said, per CNBC.
“This recognizes that the risks of inflation falling too slowly and of the economy weakening too quickly are becoming more balanced,” she continued.
Collins noted that she doesn’t believe a “significant slowdown” in the economy is necessary to tame decades-high inflation.
“Therefore, it will increasingly be important to balance the risk of possibly slowing demand in the economy too much, with the risk of allowing inflation to persist too long and possibly de-anchoring inflation expectations,” she said.
Last week, the Federal Reserve signed off on a fourth-straight seventy-five-basis-point interest rate hike but hinted that it might be getting closer to slowing the pace of future rate increases.
With the widely telegraphed move, the central bank boosted its short-term borrowing rate to a target range of 3.75 percent to 4 percent, the highest level seen since January 2008. Meanwhile, futures markets are pricing in the greatest odds of a peak rate of 5 percent to 5.25 percent sometime in the first half of 2023.
Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.