Federal Reserve Bank of Philadelphia President Patrick Harker on Friday reiterated his preference for keeping interest rates stable: “This is a time when doing nothing is equivalent to doing something, and in fact, I would say that is doing quite a bit,” Harker said in his speech to the Risk Management Association in Philadelphia.
Main conclusions of the speech:
I remain convinced that we have reached a point where The most prudent thing is to maintain the official interest rate. I have reached this decision after carefully reviewing both the hard data and what I have heard directly from my contacts throughout the Third District.
Most of the data available for September is better than I expected. The latest retail sales data confirms that households retained their purchasing power and appeared to have no qualms about using it over the summer. A resistant consumer is not a problem. Indeed, perhaps the key principle of a soft landing is that households can adjust their plan when and how it suits them, as opposed to the kind of drastic and inevitable adjustments that occur, for example, when suddenly losing a job.
We will not tolerate a reacceleration of prices.
While I am willing to revise my views and act accordingly if I see signs of reinflation, I am also not going to overreact to normal month-to-month variability in data.
Prolonged labor strikes, restarting student loan payments, and international events each carry their own set of economic effects. But we won’t necessarily know its extent for some time. We’ll have to see the data.
A determined but patient monetary policy will allow us to achieve the soft landing that we all want for our economy.
Now, when do I expect rates to drop again? That’s a question I still don’t have an answer to. My forecasts are based on what I know so far. And as time passes, adjustments are completed, new data emerges, and we learn more about underlying trends, I may need to adjust my forecasts and, with them, my timelines. Suffice it to say that rates will have to stay high for some time.
Market reaction
He US Dollar Index (DXY) trading near 106.20, flat on the day, consolidating weekly losses. US Treasury yields retreat on Friday, with the 2-year yield at 5.12% and the 10-year yield at 4.95%.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
