Federal Reserve's Barkin: U.S. consumer spending may improve in July
Federal Reserve's Barkin stated that U.S. consumer spending may have improved in July, indicating that the consumer environment has warmed after experiencing early weakness. He mentioned the health of credit card data and believes the fundamentals remain strong. Although investor expectations for a rate cut by the Federal Reserve in September have risen, Barkin and other Fed officials believe that a significant rate cut is not necessary. The market's expectation for a 25 basis point rate cut has been fully priced in
According to Zhitong Finance, Richmond Federal Reserve President Barkin stated on Thursday that there are signs indicating that the consumer environment in the United States has improved in July after experiencing weakness earlier this year. He said, "I feel that consumer conditions were stronger in July. For example, if you look at the weekly credit card data, the situation is much healthier."
Barkin does not have a voting right on interest rate decisions this year, and he spoke before the U.S. Census Bureau is set to release the monthly retail sales report for July on Friday. A broader consumer spending indicator from the Bureau of Economic Analysis showed a decline in purchasing volume in the first half of this year.
Barkin stated, "Perhaps this is just a temporary economic fluctuation, and spending will return to a healthier state in the future. In my view, the fundamentals remain very healthy. People have jobs, and real wages are rising."
Due to concerns that tariffs will exacerbate inflation, investors are betting that the Federal Reserve will cut interest rates at its next policy meeting in September. Prior to this, the Federal Reserve kept the benchmark interest rate unchanged for the first eight months of 2025.
St. Louis Federal Reserve President Bullard stated earlier on Thursday that it is too early to discuss what actions he would support at the September meeting, but he believes there is no need for a significant rate cut of 50 basis points.
San Francisco Federal Reserve President Daly also stated on Wednesday that there is no need for a one-time rate cut of 50 basis points at the Federal Reserve's September meeting. She later indicated that, considering that inflation pressures are not as strong as anticipated and the job market has softened, she would support a rate cut in September.
Reportedly, after inflation in July did not show a significant rebound, U.S. Treasury Secretary Yellen stated on Wednesday that the Federal Reserve should implement a substantial rate cut of 50 basis points at the upcoming September meeting and initiate a series of rate cuts. Yellen's remarks slightly raised market expectations for a one-time rate cut of 50 basis points in September, but they remain at extremely low levels. In contrast, a 25 basis point rate cut in September has almost been fully priced in by the market
