Philadelphia Federal Reserve President Patrick Harker joined his peers in warning about inflation and stressing the need to raise interest rates to control it.
The Fed official said in remarks on Wednesday (6th) that he was concerned about inflation hitting the highest level in 40 years. He expects the Fed to respond by raising interest rates and reducing the level of bonds it holds on its balance sheet.
“Inflation is too high, and I’m very concerned about it,” Harker said in a speech at the Delaware Chamber of Commerce.
“The bottom line is that generous fiscal policy, supply chain disruptions and easy monetary policy have pushed inflation well above what I and my FOMC colleagues can accept,” he said. “I’m also concerned that inflation expectations could become volatile.”
Two of his colleagues, Fed Governor Lael Brainard and San Francisco Fed President Mary Daly, also expressed concerns about inflation the day before. Brainard has always been an influential “dovish”, usually leaning towards lower interest rates and less restrictive monetary policy, but she said on Tuesday (5th) that reducing inflation is “critical” and requires “a series of raising interest rates” and shrinking the balance sheet “rapidly”.
Harker’s comments were remarkably similar to Brainard’s views on rate hikes.
He said he expected “a series of deliberate and methodical rate hikes over time and data releases,” but he did not dwell on the issue of shrinking the balance sheet.
Harker is a non-voting FOMC member but has some influence over the committee’s final decision. On the broader economy, he sees growth as “robust” and believes inflation will eventually fall to the Fed’s 2% target.