Philadelphia Fed President Patrick Harker on Tuesday suggested he might support one more quarter-percentage-point interest-rate hike before pausing.
Since last March, the Fed has increased its benchmark rate from close to zero to a range of 4.75%-5%.
“My view all along, and I have been pretty public about this, we need to get rates above 5% and then sit there for a while,” Harker said in a speech to the Wharton School at the University of Pennsylvania.
“We’re already seeing promising signs that these actions are working — for example, house-price indexes are cooling,” Harker said.
Interest-rate policy works with a lag, and this cooling will happen at a different pace for different sectors, he added.
“Since the full impact of monetary-policy actions can take as much as 18 months to work its way through the economy, we will continue to look closely at available data to determine what, if any, additional actions we may need to take,” Harker said.
“If we see inflation not budging, then I think we’ll have to take more action. But, at this point, I don’t see why we would just continue to go up, up, up and then go ‘oops’ and go down quickly,” Harker said.
“Let’s just sit there for a while and see how it goes,” he said.
Fed officials will meet again in early May, Judging from recent speeches, the Fed is considering whether to pause their interest-rate campaign or hike by another further 25 basis points.
Earlier Tuesday, Chicago Fed President Austan Goolsbee said “prudence and patience” was the right policy approach in the wake of the turmoil in the financial sector.
Other officials, like St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester, have said interest rates will need to go higher to bring inflation down.
Another camp has said they want to look at all the data before they decide the proper course of action.
Stocks
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were mixed on Tuesday. The yield on the 10-year Treasury note
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rose to 3.43%.
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