Sept 23 (Reuters) - Federal Reserve Governor Michael Barr said on Wednesday the US central bank took an important step last week to "recalibrate" short-term borrowing costs to bring down inflation, and will likely need to deliver further interest rate hikes.
"Risks to achieving our inflation target have increased, while risks to the labor market have receded," Barr said in prepared remarks for delivery at a Chicago Fed housing affordability conference.
He noted that US economic growth is strong and the labor market is solid, but inflation remains above the Fed's 2% goal and is not headed clearly downward. "In my base case, further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion," Barr said.
In a unanimous decision last week, Fed policymakers raised the central bank's policy rate to the 3.75%-4.00% range, and 16 of 18 of them signaled the Fed would probably need to deliver at least one more rate hike before the end of this year. Barr's remarks suggest he feels at least two more rate hikes will be required, though he did not say by when.
Barr's specificity about where he sees monetary policy needing to go stands in contrast to Fed Chairman Kevin Warsh's refusal to provide any kind of forward guidance about the rate path.
"In my view, given changes to the economy, we were out of position, and we made an adjustment in the right direction," Barr said in his prepared remarks, referring to the quarter-percentage-point rate hike last week. "We want to support sustainable, durable growth in support of maximum employment, and price stability is crucial to that."
Barr's remarks on monetary policy were brief, with the bulk of his speech focused on housing affordability, which has been made worse by a lack of supply and high mortgage rates.
The average rate on a US 30-year fixed-rate mortgage rose to 7.12% last week, more than a two-year high, the Mortgage Bankers Association said on Wednesday.
Reporting by Ann Saphir; Editing by Paul Simao
