Richmond Federal Reserve President Barkin said yesterday at a chamber of commerce event in South Carolina that the chances of an interest rate hike have greatly increased. He stated that U.S. demand is still decent, inflation is not being suppressed, and the direction of monetary policy is relatively clear: it must move towards raising interest rates. However, he immediately added that AI is the elephant in the room, and adjustments must be made cautiously. He pointed out two risks: one is that AI may not meet expectations, leading to cuts in investment by businesses, a drop in stock prices, and a cooling of consumption supported by asset appreciation, resulting in increased unemployment. The other is that AI may develop too quickly, replacing more jobs than expected, similarly suppressing consumption. In either case, the Fed may be forced to shift its focus from controlling inflation to protecting employment. Barkin also said that he has no predetermined stance on the December meeting and will wait for the latest inflation and employment data before making a judgment. Currently, the market has about an 80% chance of betting on a December rate hike. Although he will not have voting rights until 2027, this statement directly brings AI to the core of policy, making it clearer that "interest rate hikes cannot be based solely on inflation figures." For the market, this isn't a signal of an imminent surge in interest rates, but rather a reminder that the upper limit of this round of rate hikes may no longer be solely determined by inflation. The actual implementation of AI will also influence their judgments. Data is still being released, and volatility is likely to continue until December. Don't mistake a clear direction for a one-sided market trend. The variable of AI makes the entire path more data-dependent and more prone to fluctuations. Federal Reserve Interest Rate Hike