More Fed officials jump on the March hike bandwagon

January 13, 2022

Washington (Jan 13)  Regional bank presidents Esther George (Kansas City), James Bullard (St Louis), and Loretta Mester (Cleaveland) have all called for a rate hike in March. This time in an interview with the FT it seems President of the Federal Reserve Bank of Philadelphia Patrick Harker is doing the same.

In the interview, he said, “I currently have three increases in for this year, and I’d be very open to starting in March, and I’d be open to more if that’s required.” Comments came after the recent inflation data which Harker described as “very high, very bad”.

In regards to what the Fed could do to combat inflation, he said “We don’t want to put the brakes on completely, but we do need to slow down some of the demand,” adding “We can do something . . . by raising the fed funds rate.”

In the situation surrounding inflation improves Harker said he would also support fewer rate increases if “inflation does in fact start to come down”.

Harker also noted “Ultimately, what we worry about is that people start to think, ‘Well, inflation is just not going to be at 2 percent, it’s going to be at 2.5 percent or 3 percent going forward,” he said.

Lastly, at the end of the interview, he said he believes in open market communication noting “I am very much in the camp of communicating over and over how we’re going to do this and then being methodical,”

Fed Charman Jerome Powell was also speaking on Tuesday and after his testimony on inflation, the gold price jumped (Read Here). Even though Powell sounded as hawkish as before, markets got a glimpse of how flexible the Fed is when tightening monetary policy going forward. This led to the gold price pushing through $1800/oz yet again and today the price has consolidated near $1822/oz. There are more speakers to come today with Fed's Harker, Brainard, Barkin, and Evans all on the docket and it will be important to keep up to date with all the developments. 

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