“I do believe that we are close to the point where we can hold rates in place and let monetary policy do its work to bring inflation back to the target in a timely manner,” Philadephia Fed President Patrick Harker said Thursday during a National Association for Business Economics webinar.
He said he’s closely monitoring economic data and listening to business contacts to see if additional tightening will be needed.
To bring inflation down to the Federal Reserve’s 2% goal, the central bank’s policy stance “needs to be restrictive enough — but what is ‘enough’ is not written in stone somewhere,” he said.
In a speech on Wednesday, Harker said the Fed “really should skip, not pause,” an interest-rate hike at the June 13-14 meeting.
1:48 PM ET: Event concludes.
1:44 PM ET: Regarding the tight labor market: “There are only two solutions to getting more people in the labor force — getting more people off the sidelines or more people into the country,” he said.
1:35 PM ET: Tightening credit conditions will have an impact on monetary policy. “My own sense.. it’s just my own intuition, is it will have an effect” but a very modest one, he said.
1:27 PM ET: With the banking stresses that started in March, there is “some credit tightening” but it’s not a credit crunch, he said.
1:25 PM ET: “I’m not in the recession camp right now. If we have one, it’s going to be mild,” Harker said, adding that he thinks there’s a path to a soft landing.
1:22 PM ET: “There’s a big caveat” to his position of skipping a rate hike at he June meeting — if data come in much stronger than expected before the decision.
1:20 PM ET: “We don’t have to keep moving rates up. We don’t have to reverse course,” he said.
“I think we should at least skip this meeting.”
Even with the debt ceiling close to resolved, there’s uncertainty over what will happen when the Treasury starts to sell more debt to refill its coffers, he said.
1:15 PM ET: Harker said he doesn’t expect inflation to spike. It’s a matter of how long it will take to retreat the the Fed’s 2% target, he added. “It is going to take time.”
Recent data has shown some progress, Harker said. “With the revision of wages, they weren’t as high as we thought they were.”
Developing…check back for updates.
On Wednesday, Cleveland Fed President Loretta Mester said she sees “no compelling” reason to pause rate hikes.