Labor Market Stabilizes, Policy Outlook Turns Cautious
According to Fed Governor Barr, recent indicators suggest the U.S. labor market is stabilizing, signaling that monetary policy may remain largely unchanged for the foreseeable future.
Despite earlier market speculation about rate cuts, Barr emphasized that there is currently insufficient evidence showing a sustained decline in inflation toward the Fed's target.
Inflation Risks Continue to Dominate
Barr highlighted that inflation remains a key concern for policymakers. Although progress has been made, the Fed has not yet reached its 2% target.
He stressed that any future rate cuts would require clear and consistent data, especially in relation to core goods inflation.
AI's Impact on Policy Seen as Minimal
When addressing the implications of technological innovation, Barr noted that while AI is advancing rapidly, its immediate impact on monetary policy is limited.
- AI could boost long-term productivity
- But its influence on inflation and employment remains modest at present
- Policy decisions will continue to rely heavily on economic data