Federal Reserve Board Governor Michael Barr speaks on “Artificial Intelligence and the Labor Market” before the New York Association of Business Economics (NYABE) in New York City, US, February 17, 2026.Brendan McDermid | ReutersFederal Reserve Governor Michael Barr said on Tuesday he would be prepared to support raising interest rates if inflation does not subside. At a banking forum in Washington, the policymaker said he is worried about “broader price pressures taking hold” as inflation has remained stuck above the Federal Reserve’s 2% target for nearly five and a half years. stance,” Barr said in prepared remarks. “However, if inflation appears not to be moderating enough, then I think we should act decisively to raise rates.” The comments come at a critical time for politics and against a broader backdrop of high inflation and rising Treasury bond yields. As governor, Barr is a permanent voting member on the rate-setting Federal Open Market Committee. Amid fresh concerns about the precarious situation in the Middle East, yields soared again on Tuesday, with the bond 10-year benchmark at a level not seen since mid-January 2025. At the same time, last week, Fed Chairman Kevin Warsh delivered comments that markets widely interpreted as leaning toward a rate hike, possibly as early as the next policy meeting in two weeks. Barr supported the July decision to keep the benchmark funds rate between 3.5% and 3.75%, but markets Tuesday morning were pricing in about a 66% chance of an increase this month, according to CME Group’s FedWatch tool. Barr gave the economy good grades even with high inflation. “Consumer spending to date has largely been resilient,” he said. “But inflation remains too high, and has been for more than five years,” he said. The most recent inflation readings showed headline prices rising 3.7% over the past year, or 3.3% excluding food and energy. inflation data when the consumer and producer price indices are released next week. Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.
