The U.S. economy could still deliver “sound” growth and warrant a single rate hike “at most” this year, a Federal Reserve policymaker said on Wednesday.
Federal Reserve Bank of Philadelphia President Patrick Harker said a strong labor market, muted inflation and ongoing growth “point to a fundamentally sound U.S. economy.” But he noted there is enough uncertainty that policymakers should be “patient as the data roll in.”
“I continue to be in wait-and-see mode, and my outlook for rates remains, at most, one hike for 2019 and one for 2020,” Harker said in a speech delivered at the Greater Vineland Chamber of Commerce in New Jersey. The remarks largely reiterated views Harker has presented in other recent speeches.
Harker does not vote on the rate-setting Federal Open Market Committee this year but participates in its deliberations.
After its March meeting, the Fed released projections that reduced the number of hikes expected this year to zero from the two forecast in December. That completed a pivot to a less- aggressive policy in the face of an apparent jump in economic risks, including the U.S.-China trade conflict and a global slowdown. At least nine of the Fed’s 17 policymakers reduced their outlook for the fed funds rate.
The central bank currently targets short-term rates between 2.25%-2.50%.
Data released on Wednesday showed the U.S. trade deficit fell to an eight-month low in February as imports from China plunged, providing a boost to economic growth in the first quarter.
The Atlanta Federal Reserve bumped up its gross domestic product growth forecast to a 2.4% pace from smaller estimates previously.
Reporting by Trevor Hunnicutt in New York; Editing by Dan Grebler