The Federal Reserve must avoid the mistake of declaring victory over inflation too soon, said Richmond Fed President Tom Barkin on Tuesday. In an interview on the Fox Business Network, Barkin said “the thing I learned” is one can’t declare victory too early.
“If you back off while inflation is still elevated, it will come back even higher the next time, meaning you’ve got to do even more damage to take control of it,” Barkin said. Barkin said that companies are likely preparing for a recession but said the timeline for a downturn “keeps getting pushed out” in part because the data remain healthy. “Most businesses I’ve talked to have a recession playbook. They’ve taken it out of the drawer. They’ve updated it. They may even have started working on Page One of the playbook — talking about a hiring freeze or reductions in discretionary spending, but they’re not turning to the back half of the playbook yet,” he said. That is because most companies see demand for their business as “relatively solid,” he said.