Philadelphia Fed President Harker
Philadelphia Fed president Harker is speaking on Bloomberg TV. He says:
- Central bank can influence demand through monetary policy
- Fed is not behind the curve, but needs to move now to try to control inflation
- He supports a 25 basis point hike in March
- Federal stop tapering in March
- Fed could do 50 basis point increase, but he is a little less convinced of that right now
- Fed needs to see how the data turns out in the coming months
- Economy is at maximum employment so it's about inflation
- Persistent inflation would continue to worry him
- If inflation stays where it is and starts to come down, he doesn't see a 50 basis point increase
- If there is a spike in inflation, the Fed may need to move more aggressively
- We are probably going to have a bad jobs report at the end of this week because of omicron
- monetary policy does not affect supply constraints
- Balance sheet reduction will be faster and steeper than the last time Fed did this
- Fed funds rate is the primary tool for monetary policy
- Fed's dual mandate with regard to inflation in regard to unemployment and needs to act
- Fed is actively looking at whether it will need to sell assets but no decisions have been made
- Committed to making sure Fed to start reducing the balance sheet this year
- He is focused on the data
Harker leaning toward balance sheet reduction in 2022. It is in the camp for 25 basis point hikes, although like the chair does not rule out 50 basis point if warranted.
