Fed's Barr says more rate hikes are needed to bring down inflation

Federal Reserve governor Michael Barr said Wednesday that additional interest rate hikes are needed to bring down sticky inflation.

"Further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion," Barr said in a speech in Chicago. "Inflation is above our 2% target and not clearly trending toward target in a timely way. Moreover, risks to achieving our inflation target have increased, while risks to the labor market have receded."

Barr pointed to the series of economic shocks over the past five years that have pushed up prices — from tariffs to the conflict in the Middle East, continued disruptions from Russia's war on Ukraine, and, more recently, a surge in investment demand to support the artificial intelligence build-out.

He said he supported the central bank's rate hike last week , which he said was needed because the Fed was "out of position" given the impact of the shocks on the economy.

Barr's comments come after other Fed officials this week have cautioned that it's getting harder to "look through" the supply-side shocks of tariffs, higher oil prices , and now AI and assume that the inflationary effects of those forces will dissipate on their own.

Richmond Fed president Tom Barkin said Tuesday that the supply-side shocks aren't proving to be short-lived, one-off events, and that he expects it will take time for them to dissipate. In the interim, Barkin warned that current elevated inflation levels could affect future inflation.

"With inflation more than a percentage point above target, that's a problem," he said.

Chicago Fed president Austan Goolsbee sounded a similar note.

"This has been nothing like the one-and-done pattern that underpins the case for looking through," he said in a speech on Monday. "We need evidence that these shocks are actually fading, or it's hard to see a credible path back to 2% inflation — and harder still to justify continuing to look through them."

Goolsbee said the Fed wouldn't need to hike rates as much if inflationary pressures were coming from demand, but warned it won't be "painless" either.

Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance, she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram .