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The president of the Philadelphia Federal Reserve said Wednesday the central bank doesn’t plan to cut interest rates soon because the job on reducing inflation is “not done.”
Patrick Harker, in an an interview with radio station WHY, said he doesn’t think the Fed needs to raise interest rates again.
Yet he also stressed that he favors keeping interest rates high for awhile to make sure the rate of inflation continues to slow toward the Fed’s 2% target. Prices are still rising at 3.1% annual rate.
The time will come to lower rates, he said, but he indicated he doesn’t expect the Fed to make a move anytime soon.
Harker is a voting member this year of the 12-member committee that sets rates.
The central bank has jacked up a key short-term rate to a top end of 5.5% from near zero in the spring of 2022 to curb high inflation. The rate of inflation has since slowed from a 40-year peak of 9.1%.
The Fed aims to slow inflation to a 2% annual rate. The bank is expected to leave its benchmark rate at its current level at least through the spring to make sure prices continue to decelerate.
Yet Fed insiders have been taken by surprise by a big Wall Street followed by Wall Street
SPX
DJIA
rally after the central bank left a key short-term interest rate unchanged last week. Stocks jumped to a record high and long-term rates fell sharply.
Since then senior Fed officials such as Harker have tried to convey to markets that interest rates aren’t going to be cut as soon as markets expect. Wall Street investors are betting the Fed will cut rates as soon as March.
“We should hold rate where they are,” Harker said.
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