Philadelphia Federal Reserve Bank President Patrick Harker said on Friday the central bank will continue to support the U.S. economy until it recovers from the pandemic and that he is not worried about inflation getting out of control.
“I want to hold steady, make sure we get through this period, then we can start to normalize,” Harker said during an interview with Bloomberg TV.
Harker said that the recent increase in long-term bond yields was not “massive” by historical standards and that it may not have a dramatic effect on people buying cars or homes.
“People are more optimistic about the economy,” Harker said.
The Fed official said he is committed to letting inflation run above 2% for some time, in line with the central bank’s new framework, and noted that wage pressures are only happening in certain sectors.
Policymakers agreed last week to keep interest rates near zero and to continue purchasing $120 billion a month in bonds until the economy makes “substantial further progress” toward the Fed’s goals for inflation and employment.
Harker said that he would not necessarily support keeping rates at near zero levels indefinitely, noting that keeping rates low for too long can have negative consequences for savers. But he said the priority is helping the economy recover and bringing unemployment back to pre-pandemic levels.
“This is a balancing act,” Harker said. “We need to get the economy to recover, we need to get the economy to heal with minimal scarring.”
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