Fed's Barkin: Rate-hike direction clear, AI risks make policy pace more cautious

TechFlow news, Nov. 10, according to Jin10 Data, Richmond Fed President Barkin said U.S. consumer demand remains resilient, inflation continues to run above the Fed's 2% target, and the current monetary policy direction is relatively clear, but the pace of rate hikes still needs to be cautious to address uncertainty in future demand.

Barkin specifically pointed out that AI development carries two-sided risks: if AI technology underperforms expectations, it could lead to contraction in corporate investment and declines in the stock market, thereby weakening consumption; if AI development exceeds expectations and displaces more jobs, it could also dampen demand and shift the Fed's focus back to employment risks.

The market currently still leans toward a December rate hike by the Fed. According to Bloomberg, trader pricing indicates that the probability of a December rate hike is around 80%. The Fed's next policy meeting will be held on Dec. 8-9.

Source: TechFlow