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Harker: Now Looking For 4 25bp Hikes In 2022; "Could" Do 50bp In March


A few items of note from Philadelphia Fed Pres Harker's interview just concluded on Bloomberg TV:

  • On whether the Fed is behind the curve: "There are risks on both sides...I don't think we're behind the curve...but think we need to move now, to try to control inflation."
  • On the March FOMC decision: Says he would be supportive of a 25bp hike, asks rhetorically, could we do 50? Yes, but "less convinced of that right now". Says we would have to see a pretty significant spike in inflation from where we are now, otherwise as it is, sees 25bp.
  • Says that 4 25bp hikes this year would be "appropriate" (note, in mid-January, he had pencilled in 3 hikes with a risk of a 4th, so his core view has become more hawkish).
  • On employment: "I think we're at maximum employment, this is an inflation story in my mind" (re question on how he's looking at this week's payrolls data). Says we will probably see weak payrolls number this week, due to Omicron, but "we're there" on our dual mandate.
  • On balance sheet reduction: Says Fed funds has to be reasserted as the "primary tool" to be used to adjust policy if necessary, with balance sheet runoff to be like "watching paint dry" (possible commencement later this year, or early 2023). Fed's looking at whether to actively sell assets, but Harker says he wouldn't commit to that without "seeing the analysis".

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