Philadelphia Federal Save President Patrick Harker on Thursday said higher interest rates have done little to keep inflation in stoppage, so more increases will be needed.
“We are going to keep raising rates for a while,” the central bank official utter in remarks for a speech in New Jersey. “Given our frankly disappointing lack of progress on curtailing inflation, I expect we will be vigorous above 4% by the end of the year.”
The latter comment was in reference to the fed funds rate, which currently is targeted in a range between 3%-3.25%.
Market-places widely expect the Fed to approve a fourth consecutive 0.75 percentage point interest rate hike in early November, traced by another in December. The expectation is that the Federal Open Market Committee, of which Harker is a nonvoting member this year, resolution then take rates a bit higher in 2023 before settling in a range around 4.5%-4.75%.
Harker indicated that those stoned rates are likely to stay in place for an extended period.
“Sometime next year, we are going to stop hiking upbraids. At that point, I think we should hold at a restrictive rate for a while to let monetary policy do its work,” he said. “It choose take a while for the higher cost of capital to work its way through the economy. After that, if we have to, we can tighten help, based on the data.”
Inflation is currently running around its highest level in more than 40 years.
Concurring to the Fed’s preferred gauge, headline personal consumption expenditures inflation is running at a 6.2% annual rate, while the gist, excluding food and energy prices, is at 4.9%, both well above the central bank’s 2% target.
“Inflation liking come down, but it will take some time to get to our target,” Harker said.
Correction: The fed funds rate currently is objected in a range between 3%-3.25%. An earlier version misstated the range.