Head of Richmond Fed addresses economic uncertainty in Q&A with Dean Grier
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Tom Barkin, president and CEO of the Federal Reserve Bank of Richmond, said in recent remarks that the U.S. economy is giving conflicting signals and discussed strategies the Richmond Fed uses to foster the stability, integrity, and efficiency of our nation’s monetary, financial, and payment systems.
Barkin was the keynote speaker at “2019 Economic Update,” a professional education event hosted by the Risk Management Association. Other speakers included RMA President and CEO Nancy Foster as well as VCU School of Business Dean Ed Grier who moderated the question and answer session with Barkin at the close of the event.
VCU School of Business, billed as the event’s “community partner,” was well represented, with Associate Professor and RMA Board Member Greg Waller kicking off the program and dozens of VCU business students in attendance.
VCU’s role in talent succession
Foster first outlined the top seven risks facing the financial service industry today, including: the downturn, geopolitical risk, LIBOR replacement, strategic risk and disruption, third-party risk, cyber risk, and talent succession and management. “I’m happy to be here with VCU,” Foster explained, “because we continue to hear from our membership the need for more talent in the banking sector.”
It was a theme Barkin would later touch upon in a closed meeting with the press. There, Barkin thanked VCU, saying that, when he and his wife Robin first considered relocating to Richmond, she was “very positively blown away by what VCU has done for this city – whether it be the arts scene … or just the vibrancy of the downtown area.” He also told a VCU representative, “We are hiring and so if you have people who are interested, we are very interested in talking to them.”
Highlights of Barkin’s remarks
The Richmond Fed published these highlights from Barkin’s remarks:
- The economy is giving us conflicting signals. The strength of the labor market might be saying “hold” or even “raise rates,” while low inflation and the bond market might be saying “lower rates.”
- There are risks both on both sides. On one hand, additional easing could overstimulate inflation, distort labor markets or fuel an asset price bubble.
- On the other hand, not easing could undermine the credibility of the Fed’s 2 percent inflation target or leave policymakers behind the curve if economic activity slows further.
- The Fed manages these risks by specifying a clear risk strategy and communicating its reaction function. It also operates by committee and is data-focused.
- The Fed also reviews and revises its operations to evolve along with the economy and to learn from past experiences.
- Currently, the Fed is reviewing its monetary policy strategy, tools and communication practices to ensure that we can continue to achieve our dual mandate, given low inflation and the risk of returning to the effective lower bound.
VCU students face-to-face with banking leader
Following Barkin’s remarks, Dean Grier moderated a lively question and answer session that included questions from two VCU business students.
Erfan Yakup, a senior, drew laughs when he told Barkin that his comments on the tight labor market were reassuring given that he was graduating in May. For the last three years, Yakup has been part of the VCU team that repeatedly earned the district title in the Richmond Fed’s College Fed Challenge competition.
Another student asked Barkin how young people might prepare for a possible recession.
“Having a good today, does not mean tomorrow has to be negative,” Barkin responded. “And if you look at everything I can see in the U.S. economy right now, we continue to head in a very solid path.”
“We will have recessions in your lifetime,” Barkin continued. “I’ve lived through a bunch of them, and the number one thing you can do is continue to invest in yourself. That’s learning while you are in school today, but also when you get out. It’s not just ‘Go take another class at VCU,’ it’s also build your network.
“When you get out in the workplace, you put your head down and you try to do a good job. Equally important is building and maintaining relationships with other people who you may want to have contacts with if and as the economy evolves. And in the job you are in, being open to new experiences.”