Federal Reserve's Barkin: Consumers and businesses still view oil price shocks from a "short-term perspective"

According to Golden Ten Data on April 1, Richmond Fed President Barkin stated that current corporate behavior still indicates that they see high oil prices as only a short-term disruption. At present, there is almost no evidence that this has led consumers to cut spending or to change inflation expectations in a concerning way. On Tuesday, Barkin said, "My intuition is that everyone is still looking at this issue from a short-term perspective. Gasoline spending has obviously risen sharply, but other spending still appears fairly healthy." Barkin noted that there are currently scenarios that could drive Federal Reserve policy in either direction, but in his view, the logic for raising rates would mainly center around rising inflation expectations, which would force policymakers to demonstrate their commitment to keeping inflation near the 2% target. He said, "The case for a rate hike will revolve around inflation expectations eventually starting to move higher. But at the moment, I haven't seen that kind of breakthrough." In contrast, a scenario for rate cuts would include inflation quickly falling from its current level, about one percentage point above target, back to 2%, or the job market weakening and needing support through rate cuts.