Harker Sees De­cem­ber Hike, Says 2018 Hinges on Prices

The Bond Buyer - - Market News -

Fed­eral Re­serve Bank of Philadel­phia Pres­i­dent Pa­trick Harker sug­gested he’ll likely sup­port a third 2017 in­ter­est-rate in­crease next month, but said he wants to see signs of in­fla­tion mov­ing higher be­fore back­ing tight­en­ing next year.

Harker has “not at this point” seen any­thing that would push him away from a widely ex­pected hike at the Fed­eral Open Mar­ket Com­mit­tee’s De­cem­ber meet­ing, he said in an in­ter­view Tues­day at the Philadel­phia Fed. Af­ter that, he wants to see clear signs that in­fla­tion is ac­cel­er­at­ing be­fore mov­ing again.

“I have pen­ciled in right now, in my SEP, three in­creases for 2018, but I will re­assess that as the data comes in,” he said, re­fer­ring to the Fed’s Sum­mary of Eco­nomic Pro­jec­tions. “Some of the un­der­ly­ing num­bers, like wage growth, job open­ings and hires, if we saw that that wasn’t trans­lat­ing to higher prices — our dual man­date is very clear, it’s sta­ble prices.”

Harker said he sees lit­tle risk of that in­fla­tion will shoot up, forc­ing the fed to tighten rates quickly.

“I don’t see any signs that in­fla­tion is run­ning out of con­trol in any way,’’ Harker said.

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