The Federal Reserve is approaching the point where it can hold interest rates steady after a sharp tightening since March of last year, although inflation remains uncomfortably high, Philadelphia Fed President Patrick Harker said Thursday.

“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,” said Harker. He's a voting member this year who has already said he supports skipping a hike at the June meeting and is speaking Thursday to the National Association for Business Economics. (See MNI POLICY: Fed Most Divided Since Start Of Hikes, More Loom)

He expects U.S. economic growth to be modest, below 1% for the year, and sees inflation falling to around 3.5% in 2023 before dropping to 2.5% in 2024.

Harker is worried about the possible credit tightening that might result from recent banking turmoil, but added that inflation remains too high for now.

“Disinflation is under way, but it is doing so at a disappointingly slow pace,” he said. “It will take some time to evaluate how recent events may impact overall economic activity and inflation. I expect to see tighter credit conditions for households and businesses that may slow economic activity and hiring, but the full extent is still unclear.”