Harker stresses the importance of data before adjusting interest rates
Federal Reserve Bank of Philadelphia president Patrick Harker said Thursday that policymakers should maintain a patient approach to monetary policy, emphasizing the need for greater clarity regarding the impact of tariffs and other governmental policies on the economic outlook. Harker’s remarks were delivered during an event at the Philadelphia Fed.
“Even in a time of uncertainty, we remain as certain and deliberate as ever in our approach,” Harker said, supporting the recent decisions to keep the Fed’s policy interest rate stable. This sentiment aligns with other Fed officials who have indicated a preference for holding borrowing costs steady amid the unknown effects of President Trump’s policies on immigration, trade, taxes, and regulation. According to a Bloomberg report, some within the policymaking body suggest that several months may pass before sufficient data becomes available to consider interest rate adjustments.
In what was his final address as president of the Philadelphia Fed, Harker acknowledged the possibility, though not certainty, of a future economic landscape featuring both elevated prices and increased unemployment. He stressed that understanding the “magnitude and persistence of the effects on inflation and employment” is crucial for making appropriate policy adjustments, concluding, “Which, effectively, means we have to wait and see.”
The labor market’s performance will be further illuminated with the release of the May jobs report Friday. Financial markets, as indicated by futures contracts, largely anticipate that policymakers will leave rates unchanged at their upcoming gathering on June 17-18.
Harker is set to conclude his decade-long tenure at the Philadelphia Fed at the end of this month. Anna Paulson, currently the research director at the Chicago Fed, will succeed him.
During his closing remarks, Harker also underscored the critical importance of the Federal Reserve’s independence. “It is absolutely critical that decisions on monetary policy be free of external noises and influences,” he asserted.
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