“What is driving our rate increases right now is inflation, and we are starting to see signs, early signs that inflation is starting to move down,” Harker said in a Reuters interview.
“At this point, we can go at a pace of 25 (basis-point rate hikes) and get inflation under control without doing undue damage to the labor market,” he said, adding that moving to smaller rate increases is a “risk management” issue for the Fed.
The U.S. central bank, which delivered a series of 75-basis-point and 50-basis-point rate hikes last year in an effort to bring inflation back down to its 2% target, announced a smaller quarter-percentage-point increase last week. The Fed’s benchmark overnight interest rate is now in the 4.50%-4.75% range.
That increase in borrowing costs was followed just a couple of days later by an employment report showing a gain of 517,000 jobs in January, nearly three times the forecast of analysts polled by Reuters. The jobs data raised…
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