MNI: Fed Can Hold Rates Steady, Stay There For A While-Harker

Philadelphia Federal Reserve President Patrick Harker said Tuesday the Fed may be at the point where it can end its cycle of interest rate increases, adding that he sees the U.S. economy on the path to achieving a soft landing.

“Absent any alarming new data between now and mid-September, I believe we may be at the point where we can be patient and hold rates steady and let the monetary policy actions we have taken do their work," he said in a speech.

“Should we be at that point where we can hold steady, we will need to be there for a while," added Harker, a voting member of the FOMC this year. "I do see us on the flight path to the soft landing we all hope for and that has proved quite elusive in the past.”

Two weeks ago the Federal Reserve raised the fed funds rate another 25 basis points to a range of 5.25% to 5.5% percent, the 11th increase in the span of 12 meetings.

The Philly Fed president expects core PCE inflation to decline to just below 4% by the end of 2023, before falling below 3% next year and leveling out at the 2% target in 2025. He expects unemployment to tick up slightly and better align with the natural unemployment rate. (See: MNI INTERVIEW: US Disinflation In Train But Economy Overheated)

"I believe that the resilience we’ve seen in our economy will continue, and I do believe we are poised to come out from under the pressure of inflation in good condition," he told the Philadelphia Business Journal’s State of the Economy forum.