The Federal Reserve should continue to raise interest rates until they exceed 3.4% and then “wait for a while,” Philadelphia Fed President Patrick Harker said Thursday on CNBC.
“We don’t need to rush into the up move and then the down move,” Harker said in a televised interview shortly before the start of the Fed’s economic conference in Jackson Hole.
“What is needed is to make the increases and then wait for a while and see how the situation develops,” he added. When interest rates go above 3.4% they will start to slow the economy, he said.
The Fed has raised interest rates since March by a total of 225 basis points, taking them to 2.25% from 2.5%.
For the Fed’s next meeting in September, Harker said he would wait for August inflation data before deciding on how much to raise.
The official noted, however, that even a 50 basis point increase in interest rates remains a significant increase. The Fed has raised interest rates by 75 basis points at each of its last two meetings, and investors are not ruling out a third such hike by the central bank as it struggles to rein in the highest inflation in 40 years.
Source: Capital
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