Barr, of the Fed, says new interest rate adjustments will probably be necessary

Governor of the Fed signals need for further adjustments in monetary policy

The governor of the Federal Reserve Michael S. Barr stated that, in his baseline scenario, further monetary policy adjustments will probably be necessary to bring inflation back to the 2% target in a timely manner. The statement was made during a speech at the Detroit Economic Club on 29 September 2026.

Barr highlighted that inflation remains far too high and that a clear trend of returning to the target within the desired timeframe is not yet observed. According to the prepared text, high energy prices and investments related to artificial intelligence contributed to diverting the disinflationary progress.

Risks to inflation grow while those to employment diminish

The official observed that the risks to achieving the inflation target have increased, while the risks to the labour market have decreased. The observation comes after the unanimous decision of the FOMC, at the beginning of September, to raise short-term interest rates.

The euro fell against the dollar after the statements, reflecting expectations of higher interest rates for longer in the United States.