Federal Reserve

Federal Reserve's Patrick Harker says interest rates should 'hold steady for a while'

Key Points
  • Philadelphia Fed President Patrick Harker said in a speech Wednesday that interest rates should stay where they are "for a while."
  • Markets are pricing in at least one rate cut later this year, despite policymakers saying they think policy is unlikely to change anytime soon.
Patrick Harker, President of Philadelphia Federal Reserve Bank, during the Fed's annual Jackson Hole symposium in Wyoming.
Gerard Miller | CNBC

Interest rates should stay where they are as the economy grows and the consumer continues to be in good shape, Philadelphia Federal Reserve President Patrick Harker said Wednesday.

A voter this year on the policymaking Federal Open Market Committee, Harker endorsed a wait-and-see approach to monetary policy after a year in which the central bank cut its benchmark rate three times.

"My own view right now is that we should hold steady for a while and watch how developments and the data unfold before taking any more action," Harker said in prepared remarks for a speech in Malvern, a Philadelphia suburb.

He described the national economy as being "in good shape."

"The news in general continues to be good for the consumer sector," Harker added. "Thanks to the lowest unemployment rate in 50 years and growth in wages, consumers are upbeat about the economy. Consumer confidence is high, and the optimism should support household spending this year."

At its January meeting, the FOMC elected to keep its funds rate targeted in a range between 1.5%-1.75%. The post-meeting statement said the committee would "continue to monitor the implications of incoming information for the economic outlook." At the December meeting, the "dot plot" of individual members' rate expectations pointed to no moves in 2020.

Still, the market is pricing in a 60% chance of a 25 basis point cut by September and a 41% probability of another move by the end of the year, according to the CME.

Fed Chairman Jerome Powell, who has said repeatedly that monetary policy is in "a good place," returns to Capitol Hill on Wednesday for testimony before the Senate Banking Committee.

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