Fed's Harker Backs December Hike, Says 2018 Hinges on Inflation

Fed’s Harker Backs December Hike, Says 2018 Hinges on Inflation

International News

Federal Reserve Bank of Philadelphia President Patrick Harker suggested he’ll likely support a third 2017 interest-rate increase next month, but said he wants to see signs of inflation moving higher before backing tightening next year. Harker has “not at this point” seen anything that would push him away from a widely expected hike at the Federal Open Market Committee’s December meeting, he said in an interview Tuesday at the Philadelphia Fed. After that, he wants to see clear signs that inflation is accelerating before moving again. “I have penciled in right now, in my SEP, three increases for 2018, but I will reassess that as the data comes in,” he said, referring to the Fed’s Summary of Economic Projections. “Some of the underlying numbers, like wage growth, job openings and hires, if we saw that that wasn’t translating to higher prices — our dual mandate is very clear, it’s stable prices.” Harker votes on monetary policy this year. He and his colleagues are trying to assess how quickly to tighten policy as the job market and prices send conflicting signals. Unemployment is at its lowest level since 2000 and employers report widespread worker shortages, yet price gains have held stubbornly below the central bank’s 2 percent goal, with core inflation just 1.3 percent in September.