Fed Patrick Harker Suggests Interest Rate Hikes Are Over? Harker's speech becomes the focus

<p>&nbsp;With no change in the direction of the latest economic data, Philadelphia Federal Reserve President Patrick Harker said on Tuesday that the US central bank may be at a point where it can keep interest rates at current levels. "Barring some alarming data between now and mid-September, I believe we may be at a point where we can be patient and hold interest rates and allow the monetary policy actions that we have taken to work," Harker said in a prepared speech. at an event in Philadelphia.</p><p><br /></p><p>Speeches from Harker, who has voting rights this year on the rate-setting Federal Open Market Committee (FOMC) supported a rate hike last month.</p><p><br /></p><p>However, if it is appropriate to stop raising rates, Harker said “we will have to hold rates for some time. The pandemic has taught us to never say it's impossible, but I don't see any possible circumstances for an immediate contraction of policy rates.”</p><p><br /></p><p><br /></p><p>Like other Fed officials, Harker welcomed the latest data showing inflation has eased substantially from four-decade highs a year ago at this time, and he expects that trend to continue. Harker said he now expects the Personal Consumption Finance price index, after excluding food and energy costs, to fall to slightly below 4% by the end of the year and below 3% in 2024 before "stabilizing at our target of 2% in 2025."</p><p><br /></p><p>The Fed raised rates by a quarter of a percentage point at last month's meeting to a range of 5.25% to 5.50%. Forecasts from policymakers at the June meeting showed that a majority at the time expected an increase after that, but the recent drop in inflation has reignited a deeper debate on the matter.</p><p><br /></p><p>Harker said he expects a slight increase in the unemployment rate, which was last at 3.5% in July, and slower growth in Gross Domestic Product growth from current rates.</p><p><br /></p><p>"Overall, I only expect a slight slowdown in economic activity with a slow disinflation," Harker said.</p>