Fed Officials Express Views on Recovery, Housing Market, and Digital Currencies

Federal Reserve Bank of Richmond President Thomas Barkin believes the Fed has achieved substantial further progress toward its inflation target, signaling his view that tapering asset purchases should begin soon.

“It’s pretty clear to me we have had substantial further progress against our inflation goal.”

Barkin also explained that he is pretty optimistic about the labor market, expecting achieving its respective targets in the short-term.

However, the Richmond Fed President thinks it is better to wait until next year to assess progress on price stability and employment targets before raising interest rates, adding that the economy may need more time to grow.

Similarly, Federal Reserve Bank of Boston President Eric Rosengren told the Financial Times that getting back to the 2% inflation is very important, noting that for price stability and the inflation rate sustainably maintaining this target, the economy cannot have a boom and bust cycle in something like real estate.

On a separate note, New York Federal Reserve Bank President John Williams raised questions about financial technology and modern payments methods, pointing to the need within central banks to know how to address such changes, such as digital currencies.

Meanwhile, the President of the Federal Reserve Bank of Minneapolis, Neel Kashkari, noted that big banks did not show that they are strong enough during the pandemic and the subsequent downturn, warning that without fiscal interventions, losses in the banking sector would have been much larger.

Today, yields on the government debt instruments in the U.S. declined amid increased investors’ demand, which was attributed to positioning ahead of the end of the month and the second quarter of the year, as well as geopolitical risks in the Middle East.

The U.S. benchmark 10-year treasury bond yield recorded its biggest decline since June 18, with a similar performance by the 30-year bond, while the two-year note saw the biggest drop in return since June 22.