Fed’s Harker says expecting ‘methodical’ rate hikes to tackle ‘too high inflation’

The Federal Reserve Building in Washington, U.S., January 26, 2022. REUTERS/Joshua Roberts

April 14 (Reuters) – Philadelphia Federal Reserve Chairman Patrick Harker reiterated on Thursday his view that the U.S. central bank will offer “a series of deliberate and methodical hikes” in interest rates this year to make lower generalized and “far too high” inflation.

“While the Fed can’t do much to ameliorate supply issues that are increasing inflation, we can start to affect demand,” Harker said in remarks prepared for delivery at Rider University in Lawrence. Township, New Jersey.

The speech reiterated Harker’s recent views on the outlook and effect of tighter monetary policy, which he said will help reduce economic growth this year to around 3.5% and 2% to 2, 5% over the next two years.

Inflation “should also start to decline” this year, he said, ending 2022 at around 4% and falling over the next two years to the Fed’s 2% target.

Fed policymakers began raising rates last month with a quarter-percentage-point increase and are expected to accelerate their pace of policy tightening at their next meeting in May.

Interest rate futures traders currently expect the Fed to make interest rate hikes of half a point in its next three meetings before returning to one-half point hikes. quarter point for the last three meetings of the year.

This would take the Fed’s key rate, currently in the range of 0.25% to 0.5%, to a range of 2.5% to 2.75% by the end of the year.

Reporting by Ann Saphir; edited by Diane Craft

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