Mr. Barkin said the economy was in good shape, which allowed the Fed to reduce borrowing costs. "A strong but more discerning consumer, combined with a more productive and valuable workforce, has put the economy in great shape," Mr. Barkin said on Tuesday in remarks prepared for a joint summit speech in Baltimore. "The Fed has the ability to respond appropriately regardless of how the economy evolves," he said, adding that interest rates were off their peak but still above historic lows. Mr. Barkin said he was considering two scenarios for the economy: as election uncertainty receded, businesses could start to reinvest and hire, allowing the Fed to focus on upside risks to inflation. Alternatively, companies could respond to margin compression from reduced pricing power by cutting jobs, which would increase the employment risk facing the Federal Reserve.