(Reuters) – The Federal Reserve has not yet finished its round of interest rate hikes to reduce inflation but it is likely near, Philadelphia Fed President Patrick Harker said on Tuesday.
“In my view, we are not done yet … but we are likely close,” Harker said in prepared remarks at an event in Philadelphia. “At some point this year, I expect that the policy rate will be restrictive enough that we will hold rates in place and let monetary policy do its work.”
Harker previously said in a Reuters interview last week that moving to 25-basis point interest rate rises was a good strategy for the U.S. central bank, as he flagged the prospect of rate cuts in 2024 should inflation continue to ease.
The Fed’s benchmark overnight lending rate is currently in the 4.50%-4.75% range.
Harker added that he does not see a recession on the horizon. Instead he pointed to the strength of the labor market as indicative that the central bank can bring inflation back to its 2% goal without a sharp spike in layoffs. By the Fed’s preferred measure, inflation is still running at a 5.0% annual rate.
“I do think we will see a very slight uptick in unemployment, probably topping out modestly above 4 percent this year. It’s an underrated advantage that the Federal Reserve is taking on inflation from a position of such labor market strength,” Harker said.
(Reporting by Lindsay Dunsmuir; Editing by Chizu Nomiyama)
