Fed Governor Barr Says He Would Back Rate Hike If Inflation Stays Elevated

Federal Reserve Governor Michael Barr told a banking forum in Washington on Tuesday that he would be ready to back an interest-rate increase if inflation does not ease. He warned that broader price pressures are taking hold as consumer-price growth has stayed above the Fed’s 2% target for more than five years.

"If trends in the data give me some confidence that inflation is moderating on a path to 2%, then I think we can take a bit more time to assess our policy stance," Barr said in prepared remarks. "However, if inflation appears not to be moderating sufficiently, then I think we should act decisively to raise rates."

Barr, a permanent voting member of the Federal Open Market Committee, noted that consumer spending remains largely resilient but reiterated that inflation remains too high. He added that the economy is performing well despite the elevated price environment.

The comments arrive as Treasury yields rose amid concerns about geopolitical tensions in the Middle East, with the 10-year note reaching its highest level since mid-January 2025. Markets are currently pricing a roughly 66% chance of a rate hike at the upcoming policy meeting, according to CME Group’s FedWatch, while Fed Chair Kevin Warsh has signaled a possible increase as early as the next meeting.