Date
20 January 2017
Patrick Harker is tamping down his expectations for continued monetary tightening, saying the economy is on fairly firm footing. Photo: Internet
Patrick Harker is tamping down his expectations for continued monetary tightening, saying the economy is on fairly firm footing. Photo: Internet

Fed official sees just two rate hikes this year

Two interest rate increases at the most could come before the year is out, a senior Federal Reserve official says.

Philadelphia Fed president Patrick Harker is tamping down his expectations for continued monetary tightening, saying the economy is on “fairly firm footing”, Reuters reports.

In May, Hhrker forcast at least three rate hikes this year.

Since then, US jobs growth has gone up and down and Britons have voted to leave the European Union.

Harker, who has been at the Fed for a year, downplayed any effects of Brexit, saying first-quarter US economic weakness was largely due to seasonal adjustments.

He said inflation would hit the 2 percent target in 2017 and that the Fed would raise rates toward 3 percent by the end of 2018.

“Considering the economic projections, I anticipate that it may be appropriate for up to two additional rate hikes this year,” said Harker, who does not vote on policy this year.

“Brexit is low on my list of risks and I do not anticipate more than a transitory couple of 10ths of a percentage point slowdown in growth,” he added in prepared remarks.

The Fed raised interest rates from near zero in December, its first policy tightening in nearly a decade.

But it has kept its key rate steady at 0.25-0.5 percent since then as global markets and economic data have proven volatile.

– Contact us at [email protected]

RA

EJI Weekly Newsletter