Patrick Harker, president of the Federal Reserve Bank of Philadelphia, speaks at the Fed’s annual Jackson Hole symposium in Wyoming.
Gerard Miller | CNBC
Philadelphia Fed President Patrick Harker joined the chorus of central bankers warning of inflation and interest rate hikes needed to rein in rising prices.
In comments Wednesday, the policymaker said he is concerned about an inflation rate that is at its highest level in 40 years. He anticipates that the Fed will respond by raising rates and reducing the level of bonds it has on its balance sheet.
“Inflation is running too high and this worries me a lot,” 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 much higher than I, and my colleagues at the [Federal Open Market Committee] – they feel comfortable,” he said. “I am also concerned that inflation expectations could be unleashed.”
The warning tone comes the day after two of his colleagues, Governor Lael Brainard and San Francisco Fed President Mary Daly, also expressed concern about inflation. Brainard, an influential policy dove who generally favors lower rates and looser monetary policy, said bringing down inflation is “paramount” and would require “a series of interest rate increases” and a reduction “quick” balance sheet.
Stocks fell and bond yields rose after the comments.
Harker’s comments closely resembled Brainard’s view of rate hikes.
He said he expects “a series of deliberate and methodical hikes as the year progresses and the data evolves,” although he was less emphatic on the issue of balance sheet runoffs.
Harker is a non-voting member of the FOMC who nonetheless has a say in the committee’s final decisions. In the broader economy, he sees growth as “robust” and anticipates inflation will eventually come down to the Fed’s 2% target.
At its March meeting, the FOMC passed its first rate hike in more than three years. Markets expect a succession of hikes that could ultimately push short-term lending rates to 3% or more.
Wall Street will be watching Wednesday when the minutes of that meeting are released at 2 pm ET. After the conference, President Jerome Powell He said the summary will reflect discussions over bond holdings, which have brought the balance to around $9 trillion.