Federal Reserve President Expresses Stance on Interest Rates
Philadelphia Federal Reserve President Patrick Harker stated on Wednesday that he continues to oppose any additional interest rate hikes by the U.S. central bank. However, he also indicated a willingness to consider reducing short-term borrowing costs, though not immediately. Harker made these remarks during an interview on WHYY, a Philadelphia-based radio station.
Gradual Move Towards Lower Rates
While expressing his preference for maintaining the current interest rates, Harker emphasized the importance of gradually moving them downward in the future. He clarified that the process should not be rushed, and that it would require some time to implement. These comments from Harker marked his first public statement since the Federal Reserve’s recent decision to retain the overnight interest rate within the 5.25%-5.50% range. The Fed also projected rate cuts in 2024, citing an expected decline in inflation.
Cautioning Against Premature Market Expectations
Various Federal Reserve officials have recently cautioned against overestimating the likelihood of policy easing due to the uncertain economic outlook. Harker, who served as a voting member of the Federal Open Market Committee this year, is due for mandatory retirement in 2025. During the radio interview, he expressed optimism for a “soft landing” in the economy, characterized by the avoidance of a recession, a return of inflation to 2%, and a stable job market.
Supporting Struggling Businesses
Harker cited one reason to consider lowering rates as the need to assist businesses grappling with high borrowing costs. While acknowledging that the task of managing inflation is not complete, he expressed confidence in the progress being made and the potential for further improvement.