Federal Reserve Bank of Philadelphia President Patrick Harker said the US central bank’s meeting next month is a live option for an increase in interest rates if job market momentum holds up, growth continues and wages rise.
“March is on the table. I would never take a meeting off the table, it depends on how the data evolve,” Harker, who votes on policy, told reporters on Monday after a speech in San Diego, California.
Asked what would convince him to lift rates next month, he said: “We saw some very good jobs numbers last week, continued good news around GDP and GDP growth, and continued signs that the labor market is strengthening.”
Harker is the second Fed official to say publicly that the March 14 to March 15 meeting of the policy-setting Federal Open Market Committee should be considering a potential rate move. John Williams, his colleague from San Francisco and a non-voter, told Bloomberg last week that he sees the next meeting as a possible rate-hike candidate.
Investors give roughly a one in four chance of a quarter-point increase next month, according to federal fund futures.
The Federal Reserve left rates unchanged at its policy meeting last week, while noting that measures of business and consumer sentiment had improved.
US equities have risen since US President Donald Trump’s Nov. 8 election win as investors bet he would deliver growth-boosting tax cuts, spending increases and ease up on regulations, though the new administration has yet to lay out concrete plans.
Policymakers must gauge how quickly to raise interest rates to keep the labor market from running too hot and stoking inflation. While their task has been complicated by uncertainty over the future of US fiscal policy, data have shown progress toward their twin goals of inflation at about 2 percent and maximum employment.
“I don’t want to get behind the curve — I don’t think we’re behind the curve now,” Harker said.
Harker also said it was still too early to judge what the Trump administration’s policies would mean for the US economic outlook.
“They really haven’t laid out, the administration, any details about what those policies would look like — and it’s the package of policies,” Harker said. “You could say, on one side, we’re going to create infrastructure stimulus, at the same time we’re going to reduce trade by putting up tariffs, and then, potentially, retaliatory tariffs coming. What’s the net effect of that? It all depends on the relative sizes of those programs.”
Harker also cautioned against rolling back the Dodd-Frank Act without careful consideration of the banking reforms enacted in response to the 2008 to 2009 financial crisis.
“Let’s just be thoughtful about what kind of changes we want and make sure we really understand the implications of those changes,” he said, noting that there are stability-enhancing measures in Dodd-Frank and it is impossible to talk about the law in generalities.
Trump on Friday last week ordered a sweeping review of Dodd-Frank in his administration’s most aggressive steps yet to loosen regulations in the financial services industry.
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