Fed’s Harker: We may be at the point where we can be patient and hold rates steady
|“I believe we may be at the point where we can be patient and hold rates steady and let the monetary policy actions we have taken do their work”, said Philadelphia Federal Reserve Bank President Patrick Harker stated on Tuesday.
Speaking about the economic outlook at an event hosted by the Philadelphia Business Journal, Harker mentioned that he expects "only a modest slowdown in economic activity to go along with a slow but sure disinflation." He will answer questions from the audience.
Key takeaways from the speech:
I bet what you want to know is what we are going to do next. Unfortunately, I do not know — it depends on what the data will tell us from now to our next meeting in September.
Ten days ago, the latest PCE inflation report showed continued disinflation year over year on the headline measure and promise on the core measure. We are making progress against inflation. It has been slow progress, and I am watchful of any reemerging price pressures. We remain unwavering in our commitment to bring inflation back to target.
I expect core PCE inflation to decline to a rate perhaps just below 4 percent year over year by the end of 2023, before falling below 3 percent next year and leveling out at our 2 percent target in 2025.
I expect only a modest slowdown in economic activity to go along with a slow but sure disinflation. In other words, I do see us on the flight path to the soft landing we all hope for and that has proved quite elusive in the past.
Absent any alarming new data between now and mid-September, I believe we may be at the point where we can be patient and hold rates steady and let the monetary policy actions we have taken do their work.
Should we be at that point where we can hold steady, we will need to be there for a while.
Market reaction:
The US Dollar Index is up by 0.63% on Tuesday, approaching August highs, trading around 102.70. This surge is boosted by risk aversion.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.