Federal Reserve warns of US economic instability and inflation risk

Richmond Federal Reserve President Tom Barkin said the United States economy could face heightened instability because of supply‑chain shocks, geopolitical tensions and slower workforce growth. He warned that these pressures may keep inflation above the Fed’s 2 % target, complicating the central bank’s effort to achieve price stability and potentially affecting employment and inflation expectations.

Other Fed officials have noted that the tight labor market is not currently driving inflation, but the combination of external risks could prolong the need for restrictive monetary policy. Market participants are responding by viewing gold as a safe‑haven asset amid the uncertainty.

The remarks underscore the Fed’s concern that inflation may remain sticky, which could influence future policy decisions and market dynamics.