Fed's Barkin Backs Gradual Rate Hikes as Policy Sits Near Neutral

Richmond Federal Reserve President Tom Barkin stated that monetary policy is positioned around neutral and that a gradual pace of interest rate hikes makes sense. Speaking amid resilient demand and sticky inflation driven by tariffs and cost pressures, Barkin noted the primary policy question is timing and pace. Market expectations continue to price in further tightening, with CME FedWatch reflecting a 76.2% probability of a 25-basis-point rate hike in December to 4.00%-4.25%, easing slightly from 79.9% a week earlier, while other market pricing indicated an 82% likelihood.