The U.S. central bank is unlikely to raise its policy level until 2023, Philadelphia Fed President Patrick Harker said Wednesday.
In an interview with Yahoo Finance, Harker was asked about the bond market starting the price in the first Fed rate hike next year.
“I can only speak for myself … I never look at walking in 2022,” Harker said. “I mean we have a long way to go. ”
“There is still so much uncertainty in the economy. Let’s climb out of this pandemic and see where we go, ”said Philadelphia Fed president.
Harker predicted economic growth in the 4% range in 2021, with the unemployment rate falling to around 5% from its 6.3% level in January.
Harker said inflation will come in at an annual rate of 1.7%, still below the Fed’s 2% target longer than Fed.
“We’re climbing out of this situation, it’s going to be bumpy,” he said.
Harker said his forecast only accepted a $ 900 billion incentive package.
When asked if he was concerned that the larger package under consideration in Congress would overheat, Harker said he saw no signs that inflation is spiraling out of control.
If inflation rises just above 2%, that is “more than is appropriate,” he said.
When asked if the Fed could push interest rates further, Harker said the Fed has the asset purchase program and yield loop control as tools if needed.
But Harker was reluctant to take further mitigation measures.
“At this stage I am determined to stay where we are. When you are in the middle of a crisis, the best you can do is change, ”he said.
Earlier Wednesday, Chicago Fed President Charles Evans said markets need to understand that the Fed is committed to seeing inflation move higher.
The central bank’s Beige Book study found few signs of inflationary pressures.
Stocks moved lower Wednesday as interest rates rose. Yield on 10-year Finance note TMUBMUSD10Y,
6 basis points rose to 1.47%. Dow Jones industrial average DJIA,
lost 119 points while the Nasdaq COMP tech-heavy index,
lost 361 points.