President of the Federal Reserve Bank of Philadelphia Patrick Harker He said on Thursday that he expected three or four rate hikes would be appropriate this year as the central bank grapples with troubling inflation.
His thoughts on CNBC’s “turn off the chimes, which was in line with an estimate released in December by the decision-making Federal Open Market Committee.
However, when officials then started Three-quarters percent chance of an increase For the Fed’s benchmark overnight borrowing rate this year, Harker said he would likely accept more.
“We do need to do something about inflation. It’s more persistent than we thought. I’ve been out of the ‘interim’ team for a while,” he said, citing the term Fed officials use to describe inflation. Most of 2021, then turn towards the end of the year. “I think it’s appropriate to take action this year,” Harker said. “three [hikes] Yes I have already written it, but four is not impossible in my opinion. “
In the same week, he said the Labor Department report showed a spike in inflation in the U.S. economy. Consumer price inflation is 7%, which is the highest year-on-year growth rate since June 1982, while Wholesale prices up 9.7% in 2021 Compared to the previous year, the largest full-year data change dates back to 2010.
Following its December meeting, the FOMC set a timetable that would also end its monthly bond purchases around March. Minutes to be published later Some members also believed the Fed should start shrinking its balance sheet this year, possibly allowing some of its bond yields to roll over each month.
But Harker advocates a slower approach.He thinks the Fed should wait until “for the sake of arguing 100 basis points” or after four rate hikes to start cutting $8.8 trillion balance sheet As a result of asset purchases during the pandemic.
“I don’t want to do it all at once. I think it’s the wrong approach,” he said. “Let’s do it in stages.”
Slowing down will cushion the economy from a possible shock to the economy as the Fed pulls back from the loosest monetary policy in its history, he said. He said if the Fed “acts cautiously and methodically” it could avoid stifling the recovery. That’s why I’m not raising rates and normalizing balance sheets at the same time.
Earlier in the day, the president of the Chicago Fed Charles Evans He also said he sees three rate hikes as most likely, although he is open to more.
“That could be a good start to the year, depending on how the data comes out,” Evans told reporters. “It could be four if the inflation numbers don’t improve fast enough.”
Neither Evans nor Harker are FOMC voters this year, although they do have their say at policy meetings, and their views are part of a “dot plot” of committee members’ rate expectations.