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ECON O M Y

Fed's Patrick Harker is 'acutely

concerned' about inflation, sees
'deliberate' rate hikes
Jeff Cox
@ J E F F. C OX .7 5 2 8
@ J E F F C OXC N B C C O M

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KEY Philadelphia Fed President Patrick Harker on Wednesday warned about inflation
POINTS and the interest rate hikes needed to control rising prices. UP NEXT | ET Listen

The cautionary tone comes the day after two of his colleagues, Governor Lael
Brainard and San Francisco Fed President Mary Daly, also expressed concern over
inflation.

Harker said he expects "a series of deliberate, methodical hikes as the year
continues and the data evolve," though he wasn't quite as emphatic about the issue
of balance sheet reductions.

NEW YORK, NEW YORK - SEPTEMBER 27: Philadelphia Federal Reserve President Patrick Harker visits "Mornings With Maria" at Fox
Business Network Studios on September 27, 2019 in New York City. (Photo by John Lamparski/Getty Images)
John Lamparski | Getty Images Entertainment | Getty Images

Philadelphia Federal Reserve President Patrick Harker joined the chorus of

central bankers warning about inflation and the interest rate hikes needed to
control rising prices.

In remarks Wednesday, the policymaker said he is worried about an inflation

rate running at its highest level in 40 years. He anticipates the Fed will respond
by raising rates and reducing the level of bonds it is holding on its balance
sheet.

"Inflation is running far too high, and I am acutely concerned about this,"
Harker told the Delaware State Chamber of Commerce.

"The bottom line is that generous fiscal policies, supply chain disruptions and
accommodative monetary policy have pushed inflation far higher than I — and
my colleagues on the [Federal Open Market Committee] — are comfortable
with," he said. "I'm also worried that inflation expectations could become
unmoored."

The cautionary tone comes the day after two of his colleagues, Governor Lael
Brainard and San Francisco Fed President Mary Daly, also expressed concern
over inflation. Brainard, an influential policy "dove" who generally favors lower
rates and less restrictive monetary policy, said reducing inflation is "of
paramount importance" and would require "a series of interest rate hikes" and
a "rapid" reduction of the balance sheet.

Stocks dropped and bond yields rose following the comments.

Harker's comments closely resembled Brainard's view on rate hikes.

He said he expects "a series of deliberate, methodical hikes as the year

continues and the data evolve," though he wasn't quite as emphatic about the
issue of balance sheet reductions.

Harker is a nonvoting FOMC member who nonetheless has input into the
committee's final decisions. On the broader economy, he sees growth as
"robust" and anticipates inflation ultimately coming down to the Fed's 2%
goal.

At its March meeting, the FOMC approved its first rate increase in more than
three years. Markets expect a succession of increases that ultimately could take
short-term borrowing rates to 3% or above.

Wall Street will be watching Wednesday as minutes from that meeting are
released at 2 p.m. ET. Following the meeting, Chair Jerome Powell said the
summary will reflect discussions on the bond holdings, which have brought the
balance sheet to about $9 trillion.

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