The Philly Fed didn’t break with tradition when it “elected” Harker as its new regional president. In an article on CNBC today, Harker defends the Fed’s choice to hike rates in June:
A senior Federal Reserve policymaker has batted aside investor concerns that US officials made an error in lifting interest rates against a backdrop of weak inflation, arguing the central bank should forge ahead with plans to reduce its balance sheet.
Patrick Harker, the president of the Federal Reserve Bank of Philadelphia, said he advocated policymakers “pause” on rates in the coming months while they started paring back the bank’s asset holdings. But he stressed that his business contacts were being “really pressured” by demands for wage rises given the strong jobs market and that he expected inflation should eventually assert itself.
“We need to get on with this,” Mr. Harker said, referring to the Fed’s plan to phase out reinvestments of the proceeds of maturing securities on its $4.5tn balance sheet. “We have been talking about it for a long time; it has been part of our plan. The economy is strong enough now where we can start to do what we have said we are going to do.“
Sure. We can’t let facts, like the fact that inflation has been softening for the last three months, get in the way of the plan.
He may as well have said something like “Target? What target?” Or perhaps something like, “I don’t care about the target.” They’ve wanted to raise rates and shrink the balance sheet so long, nothing can stop them now, not weakening economic activity, not weak inflation. Nothing. Equilibrium and expectations be damned.