NEW YORK: Federal Reserve Bank of Philadelphia President Patrick Harker sounded an upbeat note on the state of the U.S. economy on Monday, and said he saw no reason to change interest rate policy right now as the central bank continued to work to lower inflation levels.
“The current data paints a picture of an American economy that continues to function from a position of strength,” Harker said in the text of a speech to be delivered before a group in Nassau, Bahamas.
Inflation remains elevated but appears on track to ease over time, amid “resilient” growth and a balanced jobs market, and “these are reasons enough for holding the policy rate steady,” the official said.
Harker said he expected inflationary pressures to continue to wane and move back to the 2% target in the next couple of years.
“While I won’t commit to a specific timetable, I remain optimistic that inflation will continue a downward path and the policy rate will be able to decline over the long run,” he said.
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Harker, who is set to retire from the bank later this year, said he supported the Fed’s decision to hold its interest rate target steady at between 4.25% and 4.5% at the end of last month.
Central bank officials, confronted with inflation data that’s proved hotter than expected, while dealing with the uncertainty of the economic policies of the administration of President Donald Trump, have been hesitant to provide much guidance about the future path of rate cuts.
Many economists believe President Trump’s mix of huge import taxes and worker deportations will drive up inflation pressures.
“With regard to inflation, we simply do not yet know what, if any, impacts we may see from new economic policies and priorities, whether they be domestic or foreign in nature and impact,” Harker said.
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