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The Fed: Fed’s Barr expects ‘significant softening’ in economy and rising unemployment

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The U.S. economy is likely to slow in coming months, and more workers will lose their jobs, a top Federal Reserve official said Tuesday.

“I think that it is the case we are going to see significant softening in the economy,” said Fed Vice Chairman for Supervision Michael Barr, during an appearance before the Senate Banking Committee.

Barr said he didn’t have a precise estimate of the slowdown. The Fed has been rapidly raising its benchmark interest rate this year in order to cool inflation. Some economists think the rapid pace will lead to a recession.

Asked by Sen. John Kennedy, Republican of Louisiana, for his comment on former U.S. Treasury Secretary Lawrence Summers’ prediction that unemployment rate will have to rise towards the 6% range to cool inflation, Barr said only that he thinks unemployment would likely rise, but didn’t speculate on how high.

“I have seen a wide range of predictions on that,” Barr said.

The unemployment rate stood at 3.7% in October.

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