This site contains advertisements
Easy Account Opening with XM is Just a Click Away!
Let’s Start by Opening an Account!
Amid differing opinions on recent monetary policy, Philadelphia Fed President Harker has expressed the view that the Federal Reserve’s decision to keep interest rates unchanged last week was the right one. In his prepared remarks for a speech, he stated his support for the decision to hold rates steady and explained the reasons from his position, which does not grant him voting rights at this year’s Federal Open Market Committee (FOMC) meetings.
Harker’s Perspective
Harker pointed out that economic data indicates ongoing disinflation, improvement in the labor market balance, and resilience in personal consumption. He highlighted these elements as necessary for a “soft landing” of the economy and noted that progress has been made in lowering the inflation rate to the Fed’s 2% target, which he deemed as “real progress.” Thus, Harker emphasized the appropriateness of maintaining the current interest rate.
Fed’s Monetary Policy Direction
On the other hand, the Federal Reserve, during the January 30-31 FOMC meeting, maintained the federal funds rate target at 5.25–5.50% and suggested that given the slowdown in inflation, the next move could likely be a rate cut. However, Chairman Powell restrained speculation about a rate cut in March during the post-meeting press conference, and other officials also indicated that determining the timing of a rate cut could take time. This has sparked discussions about the direction of monetary policy.
Objective of Fed’s Monetary Policy
According to Harker, the Fed’s monetary policy aims for a soft landing of the economy. He stated that the policy has charted a course toward this goal, and considering the data so far, he mentioned that “the runway to the destination is in sight.” Hence, the Fed is adjusting its interest rate policy to ensure stable economic growth.
Outlook on Rate Cuts
There is no clear outlook on the timing of rate cuts. While Harker did not mention rate cuts, other officials also suggested that determining the timing of a rate cut could be challenging due to reliance on economic data and market trends. Therefore, careful consideration is required regarding the timing of rate cuts.
Evaluation of Fed’s Inflation Target and Policy
Finally, the Fed’s monetary policy is evaluated as effective in achieving the inflation target. Harker viewed the decline in inflation rate as “real progress” and indicated that the policy has been effective in addressing disinflation. Thus, the Fed’s interest rate policy is considered an appropriate measure for ensuring economic stability and managing the inflation rate.
In conclusion, amidst divergent opinions on monetary policy, Harker’s perspective supports the decision to keep interest rates unchanged, and the Fed’s interest rate policy is evaluated as appropriate for ensuring economic stability and managing the inflation rate. However, careful consideration is needed regarding the timing of rate cuts.
コメント