The Fed: Fed’s Harker: One interest-rate hike in 2019 and another in 2020 will be appropriate

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Senior economics reporter

Philadelphia Fed President Patrick Harker won’t vote on interest-rate decisions until next year.

Philadelphia Federal Reserve President Patrick Harker said Wednesday his outlook for the economy suggests the central bank can continue to inch interest rates higher this year and next.

“My own view is that one rate hike for 2019 and one for 2020 are appropriate,” Harker said in a speech to the Jewish Business Network luncheon.

The Philadelphia Fed president said he expects gross domestic product to grow “a bit above” a 2% annual rate this year, and then slow slightly to 2% into 2020. This year’s January-March quarter will be very slow, with growth closer to 1.5% rate, and then growth will pick up in following quarters, he said.

Harker will be a voter on the Fed’s interest-rate committee next year.

Harker said he would be watching inflation closely but, at the moment, said he was not troubled by what he was seeing.

Core inflation “is not on an accelerated path; if anything, it’s edging slightly downward,” he said.

“With a temperate climate for inflation, continued strength in the labor market, very slight downside risks, solid, but moderate, growth projections for the next couple of years and, of course, a climate of uncertainty, I continue to be in wait-and-see mode,” he said.

“Or to use the word of the moment, I see ‘patience’ as a virtue,” Harker added.

He stressed his projections are not “written in ink.”

“If we had a perfectly functioning crystal ball, those predictions would be infallible — and I’d be playing the lottery a lot more,” Harker said.

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