Fed's Harker sees potential for long-term interest rate decline

Published 17/02/2025, 16:22
© Pavlo Gonchar / SOPA Images/Sipa via Reuters Connect

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.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.