Philadelphia Fed President Patrick Harker
It makes sense for the Federal Reserve to delay another interest rate increase until inflation picks up, said Philadelphia Fed President Patrick Harker on Tuesday.
“I am approaching near-term policy more cautiously than I did a few months ago,” Harker said in a speech to the Greater Philadelphia Chamber of Commerce.
“It might be prudent to wait until the inflation data are stronger before we undertake a second rate hike,” he said.
Given the behavior of oil prices, inflation is likely to be “quite low….probably even negative” in the first quarter, Harker said.
And inflation has only been above the Fed’s 2% target for two years since 2008, he noted.
Harker said he saw downside risks to inflation and as a result, “it may be worth erring on the side of accommodation to ensure against that outcome.”
The Philadelphia Fed president said he was upbeat about the economy despite the “bumpy start to the year.”
He said conditions might start to improve in the second half of the year which can allow the Fed to raise interest rates at a faster pace.
Harker is not a voting member of the Fed policy committee this year. He is seen as centrist in interest-rate deliberations.