Philadelphia Federal ReserveFederal Reserve President Patrick Harker said that while high inflation is coming down at a disappointingly slow pace, the U.S. central bank may not need to raise interest rates much to hurry the process along.
I am closely monitoring incoming data, listening to our contacts and audiences, and evaluating economic conditions to assess whether additional tightening will be needed, he said in remarks prepared for delivery to a National Association for Business Economics webinar.
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, Harker said.
Since March 2022, the Fed has been raising borrowing costs to combat high inflation, which has dropped from a peak of 7% last summer to a current rate still above 4%, more than twice the central bank's 2% target.
In early May it lifted its policy rate for a 10th straight time to a target range of 5.00% - 5.25%, and policymakers have since signaled they may skip a rate hike at the Fed's June 13 - 14 meeting, to give them time to assess the impact of the rate hikes so far and of stress in the banking sector that may have tightened credit and could slow the economy further.
On Thursday, Harker said that the rate hikes are not having a cooling effect, particularly on housing prices.
The economy will grow less than 1% this year and the unemployment rate will rise to around 4.4%. He said inflation will fall to 3.5% this year, 2.5% next year and only reach the Fed's 2% goal by 2025.