Fed's Harker says he worries inflation won't be as transient as expected
While he does not expect inflation to spiral out of control, Philadelphia Federal Reserve Bank President Patrick Harker said he is worried inflationary pressures may not be as transient as expected.
EXCLUSIVE Fed's Harker says economy close to achieving inflation goal for rate hikes
The U.S. Federal Reserve may be close to meeting the inflation mandate set for raising interest rates, Philadelphia Fed Bank President Patrick Harker said, but it may be a year or longer before the central bank's employment goal is met to allow for an actual rate increase.
After running high this year because of the pandemic, inflation is likely to come down closer to the Fed's 2% target over the next couple of years, Harker said in an interview with Reuters on Thursday.
If the economy continues to improve as expected, it could potentially reach a point as soon as 2023 where the Fed's mandates for both inflation and maximum employment have been met, he said. His forecast is for the U.S. unemployment rate to drop to about 4% by the end of next year, 3.8% by 2023 and 3.6% by the end of 2024.
But he emphasized that the central bank will not be removing accommodation anytime soon. The Fed will still be adding accommodation even after it starts to reduce its bond purchases from the current pace of $120 billion a month, just at a slower rate, Harker said.
Reference: CNBC, Reuters
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