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Investing.com -- According to Patrick Harker, President of the Federal Reserve Bank of Philadelphia, monetary policy is well positioned as officials await further progress on inflation.
He noted that the policy remains restrictive after three rate cuts carried out last year and anticipates a continued fall in interest rates over the long term.
Harker's comments, which were prepared for a Bahamas event on Monday, highlighted the resilience of economic growth and production, as well as the balanced state of the labor market. These factors, he said, justify holding the policy rate steady.
While not committing to a specific timeline, Harker expressed optimism that inflation would continue on a downward path, allowing the policy rate to decrease over the long run.
Harker also noted that Consumer Price Index (CPI) inflation in January has exceeded expectations 9 out of 10 times in the past decade.
He suggested that seasonal adjustments may struggle to keep pace with a rapidly evolving economy, and that it's necessary to separate underlying trends from month-to-month fluctuations.
The Philadelphia Fed chief endorsed last month's decision to keep rates stable, stating that current rates are well suited to bring inflation back to the central bank's 2% target within the next two years, assuming the economy develops as he anticipates.
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