12:43 PM EDT, 04/04/2024 (MT Newswires) -- The Federal Open Market Committee can afford to take its time when considering interest rate decreases, Richmond Federal Reserve President Tom Barkin said Thursday at the Home Building Association of Richmond.

Barkin noted the recent signals in the data that have suggested stronger-than-expected inflation and slower-than-expected consumer spending but suggested that it was too soon to determine whether it is a real downward shift in the economy or just a temporary pause.

"There are reasons to underweight some of the recent data, including seasonal adjustments and winter weather, but it does raise the question of whether we are seeing a real shift in the economic outlook, or merely a bump along the way," Barkin said.

The impact of higher interest rates over the last two years has not been fully felt, Barkin said, so a further slowing is likely. However, it does not mean that recession is the likely outcome given the businesses and consumers have already prepared for the possibility of an economic downturn.

Whatever the outcome, the Fed will be prepared to deal with it, Barkin said, echoing recent comments from other Fed officials.

"I am optimistic that keeping rates somewhat restrictive can bring inflation back to our target," Barkin said. "While I don't see the economy overheating, the Fed knows how to respond if it does. And, if the economy slows, the Fed has enough firepower to support it as necessary."

The level of uncertainty suggests a patient approach as the Fed considers its next action, Barkin added, a luxury it has due to the strong labor market.

"In the interim, I think it is smart for the Fed to take our time," Barkin said, noting the FOMC's most recent statement that it does not expect to lower rates until there is great assurance that inflation is slowing sustainably toward the 2% goal.

"No one wants inflation to reemerge," he added. "And given a strong labor market, we have time for the clouds to clear before beginning the process of toggling rates down."

The Richmond Fed president is a voter on the Federal Open Market Committee in 2024.