& Copy Bloomberg. Patrick Harker, President and CEO, Federal Reserve Bank of Philadelphia,
(Bloomberg) — Philadelphia Federal Reserve Bank President Patrick Harker said the US central bank is close to the point where it can stop raising interest rates and turn to sticking them in an effort to lower inflation further.
Harker said Thursday during a virtual event with the National Association for Business Economics.
The Philadelphia Fed president reiterated comments from the previous day that he’d prefer not to raise interest rates at the June meeting, even if officials would then need to raise them again at later meetings.
“I think we should pause,” he said, “because pausing says we’ll wait for a while — and we might.” We should skip this meeting at least in terms of augmentation. We can let some of these things resolve themselves, at least as far as possible, before we think – at all – of another increase.”
The Fed has raised interest rates by 5 percentage points in the past 14 months as it tries to calm inflation. The quick clip of that tightening prompted policymakers to say they may pause at the June 13-14 meeting to give the economy time to absorb rate increases.
Harker stressed that the economic outlook is uncertain and that he will evaluate the incoming data to determine if additional tightening is needed.
Harker, who voted on policy this year, said inflation remains “well above” the Fed’s 2% target. Commerce Department data last week showed that, although down from a peak of 7% a year ago, the Fed’s preferred measure of rate changes rose in April to 4.4% from 4.2%.
“Inflation is underway, but it’s doing it at a disappointingly slow pace,” said Harker.
He said the job market is already operating at full capacity, but that tighter credit conditions, especially after the collapse of four banks this spring, could slow hiring.
Some of the central bank’s more hawkish members said further increases may be necessary at future meetings to bring rates down completely.
In an article on Thursday, St. Louis Federal Reserve Bank President James Bullard said he believes interest rates at the bottom line are potentially constraining enough to lower inflation.
He said monetary policy is in better shape today than it was a year ago, but that “continued vigilance is required” because removal of inflation is not guaranteed.