Richmond Fed President Thomas Barkin believes that consumer spending behavior—now increasingly selective and inclined to "trade down"—can mitigate price spikes caused by import tariffs, potentially making future inflationary pressures more moderate than feared. He conveyed this view in a series of speeches and comments this week, including ahead of an event titled "Why the Consumer Matters" scheduled for Wednesday evening WIB at the Greenville Chamber of Commerce.

Barkin also signaled caution regarding the possibility of an interest rate cut in September, emphasizing the uncertainty surrounding the balance of risks between inflation and the labor market. While not a policy voter this year, he noted that consumers remain relatively resilient and the labor market is "unusual but stable," so the direction of policy will need to be determined by future data.

In a related speech yesterday, Barkin highlighted the spending patterns of low- and middle-income households (shifting to private brands and cheaper options), which he said provides a buffer against potential broader price increases. However, he warned that a sharp drop in demand could depress business volumes and margins, with potential employment risks—although large-scale layoffs are considered unlikely due to the tight labor market.

Source: Newsmaker.id