Senior Fed Official Barr Makes a Statement on Interest Rates That Cryptocurrencies Won’t Like

Federal Reserve Board member Michael Barr said he is prepared to support interest rate hikes if inflation does not fall sufficiently.

Speaking at a banking forum in Washington, Barr stated that inflation remaining above the Fed’s 2 percent target for nearly five and a half years increases the risk of broader price pressures becoming permanent in the economy.

In his prepared speech, Barr stated, “If the trends in the data give me confidence that inflation is moderately moving toward the 2 percent target, I think we can take some more time to assess our policy stance. However, if inflation does not appear to be slowing sufficiently, we must act decisively and raise interest rates.”

Barr’s remarks come at a critical time in the US, with inflation remaining high and bond yields rising again. Barr, a member of the Federal Reserve Board of Governors, is among the permanent voting members of the Federal Open Market Committee (FOMC), which sets monetary policy.

Driven by growing concerns about developments in the Middle East, US bond yields rose again on Tuesday, with the benchmark 10-year Treasury yield reaching levels not seen since mid-January 2025.

Federal Reserve Chairman Kevin Warsh’s remarks last week, interpreted by markets as a more hawkish message regarding interest rate hikes, further strengthened expectations. Warsh’s words were interpreted as suggesting that the Fed could even raise interest rates at its next monetary policy meeting in two weeks.

Barr had supported the Fed’s decision in July to keep the policy rate stable in the 3.50-3.75 percent range. According to CME Group’s FedWatch tool, markets were pricing in a probability of a Fed rate hike this month of approximately 66 percent on Tuesday morning.

Barr said that despite high inflation, the overall outlook for the U.S. economy remains resilient.

“Consumer spending has so far remained largely resilient,” Barr said, adding, “Inflation is still very high and has been for more than five years.”

According to the latest data, headline inflation in the US stood at 3.7 percent year-on-year, while core inflation, excluding food and energy prices, was 3.3 percent.

*This is not investment advice.