Richmond Fed President Tom Barkin said in a speech titled “Unlocking Our Potential” that the US economy looks “quite strong a present”. Also, underlying this growth, there is “strong consumer and business confidence”.
Even though Fed has begun raising interest rates, “they are not yet back to normal levels”. And “it is difficult to argue that lower than normal rates are appropriate when unemployment is low and inflation is effectively at the Fed’s target.
As the “economy calls for moving back to normal levels”, the Fed should “follow through”. Barkin also added that “given the strength of the underlying economy and the recent additional fiscal stimulus, the risk of normalization is reduced.”
But “how high rates will ultimately need to rise depends on economic growth.” For unlocking growth potential, Barkin suggests to “target segments of the population where labor force participation is relatively low”. Another strategy is to “invest further in workforce development.”
