Fed Harker Comments

Patrick Harker, FOMC member and president of the Federal Reserve Bank of Philadelphia, made some comments on monetary policy this afternoon in an interview with CNBC. His comments can be seen as pessimistic, as central bankers are noting that interest rates are tight enough and rate cuts could take place next year.

Harker interview highlights

• I see an increase in labor productivity
• Obviously, there is a credit crunch.
• It is not clear how much the credit crunch will affect the economy
• I’m not worried about rising market returns, they help calm the economy.
• I expect a final slowdown in the economy.

• Maybe we’ve done enough
• Politics is in a restrictive position.
• Reducing the balance also removes the iqama
• And let the tough political stance work, which should lead to lower inflation.
• I expected the unemployment rate to rise to 4%, or slightly higher.
• I see evidence that the rigidity of the labor market is easing
• I want to see weakness in the labor market, especially in the service sector.
• I don’t think AI technology will disrupt the economy.

• I think the United States will keep interest rates the same all this year, and if inflation goes down next year we can lower interest rates.
• I can’t predict when the Fed will cut interest rates
• If inflation falls faster, we may cut interest rates sooner

While Harker’s comments were somewhat dovish, the markets’ reaction was mixed, with the dollar and US indices losing some ground during his speech.

The US Dollar Index fell slightly on Harker’s dovish comments. Source: Xbox 5