MNI: Fed’s Harker Supported Rate Hold, Sees Inflation Progress

The Federal Reserve was right to keep rates on hold last week as evidence mounts that inflation is steadily coming down, Philadelphia Fed President Patrick Harker said Tuesday.

“While inflation does remain above target, real progress is being made,” Harker said in prepared remarks thatmade no reference to possible rate cuts.

He cited improvement in PCE data for January showing a core rate of 2.9%. “That is down 0.3% from November and marked the first time since 2021 that core PCE had dipped under 3%,” he said.

Harker said he feels vindicated in being one of the early voices in the FOMC calling for rate hikes to stop, a decision he said was based in part from the stories of economic softening he was hearing from regional contacts.

The Fed raised rates 11 times starting in March 2023, bringing the fed funds rate to a 23-year high of 5.25-5.5% in July of last year. It has since held rates steady at those levels for four meetings. Fed Chair Powell last week pushed back on the prospect of a March rate cut.