Further changes to the Federal Reserve's short-term interest rate will need to be "finely tuned" to incoming data given the risks to both the U.S. central bank's employment and inflation goals, Richmond Fed President Thomas Barkin said Tuesday.

"Both sides of our mandate bear watching. Unemployment remains low on a historic basis but has ticked up," Barkin told the Greater Raleigh Chamber of Commerce in North Carolina. "Inflation has come down but remains above target."

Interest rates are now "within the range of ‍estimates of neutral," the level that will neither encourage nor discourage investment and spending, Barkin said. "Going forward, policy will require finely tuned judgments balancing progress ‍on each side of our mandate."

The Fed is charged by Congress to maintain maximum employment and stable prices, defined by policymakers as 2% annual inflation.

The Fed's preferred measure of inflation, the Personal Consumption Expenditures Price Index, was rising at a 2.8% annual rate as ⁠of September, the most recent data available in a series delayed by last fall's federal government shutdown.

"No one wants the labor market to deteriorate much further," Barkin said. "With inflation above target now for almost five years, no one wants higher inflation expectations to get embedded. It's a delicate balance."

The Fed cut ​its benchmark interest rate by a quarter of a percentage point at its December 9-10 meeting, but officials indicated they were likely to pause further reductions in borrowing costs for now to get a better sense of the economy's direction, a process still hampered by the interruption of statistical reports last fall.

In new economic projections issued after last month's meeting, the median Fed policymaker anticipated only one quarter-percentage-point ‍rate cut in 2026.

But opinion was broadly split, with a debate already emerging about where the economy stands after a year of widespread uncertainty stoked by changes in ⁠trade, tax and immigration policy, but also of resilient growth driven by an investment boom in artificial intelligence and spending by higher-income consumers.

MIRAN: FED 'RESTRICTIVE'

Fed Governor Stephen Miran, reiterating the stance he brought to the central bank while on leave as a top adviser to President Donald Trump, told Fox Business he felt the Fed could cut rates sharply this year to boost growth without a jump in inflation.

"Policy is clearly restrictive and holding the economy back," Miran said, arguing that "well over 100 basis points of cuts ⁠are going to be justified this year."

His outlook makes him the ​most dovish Fed official by far, with a 2026 rate ⁠outlook at least half a percentage point below the rest of his colleagues and a full percentage point under current market expectations.

That outlook could shift under a new head of the U.S. central bank, with Trump expected ‍this month to announce a successor to current Fed Chair Jerome Powell, whose term as the central bank's top policymaker ends in May.

In the meantime, Fed officials like Barkin have adopted a more nuanced approach to their ‌analysis of where the economy and monetary policy are likely to head, with an emphasis on coming jobs and inflation data that will continue to fill an information gap left by the shutdown.

The Labor Department's employment report for December, due to be released on Friday, will put reporting on job growth and the unemployment rate back on a ⁠regular schedule.

Barkin said ​he is watching layoff data with particular interest to ‍see if firms are shifting out of their current "low-hiring, low-firing" approach to managing employment.

"We're in a low-hiring, low-firing world. That could change. It could change either way," Barkin said.

Barkin said he was also paying attention to consumer sentiment surveys for any signs that households are starting ‍to become more cautious and putting the so-far resilient path of consumption at risk.

"Should the environment get to be one that people say "I've got to save for tomorrow, that would be a significant pullback in the economy," he said. "It's something to watch for."

The Fed's next policy meeting is on January 27-28.