MNI: Fed’s Harker Repeats Call To Slow Hikes To 25BPS
Philadelphia Fed president says the job market is too strong for a recession to take hold.
The Federal Reserve should slow the pace of interest-rate hikes to 25 basis points starting at the Feb. 1 decision, Philadelphia Fed President Patrick Harker said Wednesday, echoing remarks he made last week and similar calls from many fellow FOMC members.
“Hikes of 25 basis points will be appropriate going forward,” he said in prepared remarks. “I expect that we will raise rates a few more times this year, though, to my mind, the days of us raising them 75 basis points at a time have surely passed.” (See MNI: Fed Rates Likely Headed Above 5% Despite Cooling CPI)
High inflation is a “scourge,” he said, adding the Fed is committed to bringing it back down to its 2% target. He sees a recession as unlikely given the strength of the labor market and a jobless rate around historic lows of 3.5%.
“GDP growth will be modest, but I’m not forecasting a recession. The labor markets are simply too hot to indicate a significant downturn at this point,” he said. Harker predicted the economy will grow 1% this year and 2% in 2024 and 2025.