Fed's Harker calls for 'action on inflation,' sees 3 or 4 rate hikes likely this year

cnbc.com:

Philadelphia Fed President Patrick Harker said Thursday he foresees three or four interest rate hikes this year as likely to fight inflation.

His thinking, outlined in a live interview on CNBC's "Closing Bell," is consistent with estimates the policymaking Federal Open Market Committee released in December.

But while officials then penciled in the likelihood of three quarter-percentage-point increases in 2022 of the Federal Reserve's benchmark overnight borrowing rate, Harker said he may be open to even more.

«We do need to take action on inflation. It is more persistent than we thought a while ago. I've been off the 'transitory' team for a while now,» he said, citing the term Fed officials used to characterize inflation through most of 2021 before pivoting toward the end of the year.

«I think it's appropriate to take action this year,» Harker said. «Three [hikes] is what I've penciled in, but four is not out of the question in my mind.»

Harker's comments come as Labor Department reports showed inflation surging through the U.S. economy. Consumer price inflation is at 7%, its highest year-over-year rate since June 1982, while wholesale prices in 2021 gained 9.7%, the biggest move in data going back to 2010.

Following the December meeting, the Federal Open Market Committee set a schedule that also would wrap up the monthly bond purchases by around March. Minutes released subsequently showed that some members also think the Fed should start reducing the size of its balance sheet, likely by allowing some of its bond proceeds to roll off each month.

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