In an interview with Yahoo Finance on Wednesday, Philadelphia Fed President Patrick Harkersaid they need to quickly get to the neutral 2.5% rate and raise it above 3% by the end of the year, Reuters reported.
The Fed official stated that June’s 75bp hike helps them reach a neutral position. He said he was not ready to make a decision on whether to raise 75 or 50 basis points in July.
Harker made it clear that you need a restrictive posture of monetary politicsclarifying that how to get there will depend on the data.
“Starting to see signs of declining demand, which is what we want,” Harker said, adding “we could have a couple of negative quarters of GDP.” He doesn’t see unemployment rising significantly beyond 4%. “We want to reduce inflation in a way that we don’t have a dramatic impact on the labor market,” he said.
On inflationHarker estimates that it could continue over 5% next year only to drop 2.5% the following year only after the following year.
Source: Fx Street
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