Fed's Barr: Most important question is how long to hold interest rates at a sufficiently restrictive level

Federal Reserve (Fed) Vice Chair for Supervision Michael Barr said on Monday that the central bank should proceed cautiously with monetary policy. According to him, the most crucial question is not how much higher interest rates will go but rather how long they will remain at a sufficiently restrictive level. 

Barr explained that the labor market is tight but is gradually achieving a better balance between worker supply and demand. Regarding the economic outlook, Barr expressed optimism that the Fed can control inflation without causing a significant deterioration in the jobs market.

Market reaction

The US Dollar Index is up 0.60%, trading at 106.80, on its way to its highest daily close since November.