Patrick Harker, Philadelphia Federal Reserve Bank President and voting member of the Fed’s rate-setting committee for 2017, has stated that the U.S. central bank continues to be on track to reach the Fed’s 2% goal near the end of the current year. In light of his forecast, Harker once again stated his support for two additional interest rate increases this year.
“Turning to inflation, things are still on track, despite a couple of months trending in the wrong direction,” Harker said in prepared remarks for a speech to an economics conference in Reading, Pennsylvania.
Within the last 6 months, the US central bank raised its benchmark interest rate twice – both in December, 2016 and March, 2017 FOMC meetings. Despite concerns from some Fed officers regarding inflation, expert analysts anticipate the US central bank will raise rates again at its June 13-14 policy meeting.
Harker also remarked that he believes the U.S. economy is now “essentially at normal.” He added that he feels there is very little “slack” remaining in the labor market and that he expects the national unemployment rate to fall to 4.2% by the close of 2018.
He showed confidence regarding wages, estimating they would escalate between 2.5% and 3% over the course of this year. “This is a very good sign; it’s one of the things that’s been missing as the recovery has unfolded,” Harker commented.
U.S. job growth fell off pace in the month of May, however the unemployment rate dropped to a 16-year low of 4.3%, according to the Labor Department. The same report showed average hourly earnings rose 0.2% (4 cents) last month, after a similar gain in April. That puts the year-on-year increase in wages at 2.5%.