Fed’s Barkin says rate hikes should continue until inflation stays at 2%

Despite positive inflation data this week, Richmond Federal Reserve President Thomas Barkin said Friday that more rate hikes will be needed to ease price pressures.

This week’s releases showing that consumer price increases and wholesale prices moderated in July were “very welcome,” Barkin told CNBC’s “Squawk on the Street” in a live interview.

“So we are happy to see inflation starting to come down,” he added. But he noted that “I’d like to see a period of sustained inflation under control, and until we do that, I think we’re just going to have to keep moving rates into restrictive territory.”

Core consumer prices were unchanged in July, while producer prices fell 0.5 percent, according to the Bureau of Labor Statistics.

However, this was only one month’s worth of data: CPI was still up 8.5% year-on-year, and the producer price index was up 9.8%. Both numbers are still well above the Fed’s 2 percent target for long-term inflation, so Barkin said the central bank needs to move forward until it hits its target.

“You’d like to see inflation move towards our target, which is 2% on PCE, and I’d like to see it move towards our target over a period of time,” he said. The Federal Reserve uses the Personal Consumer Expenditure Price Index as its preferred measure; Core PCE for June ran at a 6.8% annual rate, while the core rate excluding food and energy was 4.8%.

Barkin’s comments echo those of most Fed officials who have recently spoken about interest rates.

The central bank raised its benchmark lending rate by 0.75 percentage points at each of its last two meetings. Markets are divided on whether the Fed will hike by three-quarters of a point in September or cut to half a point, with traders leaning slightly toward the latter, according to data from CME Group on Friday morning.

Whatever the case, Barkin said it’s important to act aggressively now. He said his constituents are deeply concerned about inflation and want action from the Fed.

“Consumers really don’t like inflation, and one message I get loud and clear as I go around my district is ‘we don’t like inflation,'” he said.