FX.co ★ Fed's Barkin Warns U.S. Vulnerable To Inflation Shocks - FT

The U.S. economy is currently more susceptible to inflationary shocks than it was previously, according to Tom Barkin, President of the Federal Reserve Bank of Richmond, in an interview with the Financial Times released on Wednesday. This increased vulnerability comes amid rising concerns among businesses about the ramifications of the Trump administration's tariff and immigration policies.

Barkin noted, "We find ourselves somewhat more exposed to cost shocks related to inflation, whether stemming from wages or other factors, than we were five years ago," as reported by Financial Times.

Although Barkin anticipates a moderation in inflation, he cautioned that businesses are more frequently passing on these costs to consumers compared to the past, thereby influencing prices.

In October, U.S. inflation quickened to 2.6 percent from 2.4 percent in September, while the core price growth held steady at 3.3 percent.

Earlier this week, Barkin emphasized the importance of a cautious approach to the Federal Reserve's rate-cut strategy in an interview with Yahoo Finance, citing the uncertain economic outlook.

Moreover, last week Federal Reserve Chair Jerome Powell stated that there is no immediate rush to lower interest rates, given the economy's current strength. This stance has tempered expectations for a rate cut in December, following a quarter-point reduction earlier this month.