Barkin Warns 4.1% PCE Inflation Stays Too High as Fed Weighs 2026 Rate Hike

1 articles · Updated · Fortune · Jun 28

4.1% PCE inflation in May — the fastest since April 2023 — prompted Richmond Fed President Tom Barkin to say price growth is still too high and not convincingly headed back to the Fed’s 2% target.
Barkin said cheaper gasoline after the US-Iran ceasefire may ease some pressure, but inflation has broadened beyond the oil shock, with strong consumer spending and AI infrastructure build-outs adding to demand.
He argued inflation could persist as businesses keep using current price trends in setting prices, even though consumers are resisting increases and limiting how much higher costs firms can pass through.
Fed officials left rates unchanged earlier this month, but Barkin said keeping policy modestly restrictive is reasonable as more policymakers warn rates may need to rise later this year.