Philly Fed's Harker sees no reason to increase rates
Philly Fed's Harker sees no reason to increase rates, given current economic conditions, though the moderately hawkish non-voter doesn't feel boxed in on rates and believes the Fed is approaching normal on rates. He said that if the markets believe yield curve inversion is a recession indicator, then it is. He also sees some value in the U.S. inflation target not getting out of sync with the rest of the world, while tariff uncertainty is weighing on some U.S. businesses. If there was a deep recession, the Fed would need to dip into its unconventional monetary policy toolkit. Harker also has no concern that Trump's Fed nominations (Moore) damaging Fed independence. Earlier he noted labor shortages as a big risk and argued that inflation would need to clear and stay above 2% to raise rates this year, with neutrality perhaps 1-2 moves away. He noted that the markets not for the first time are less optimistic than the Fed and the dot plot is not a commitment. This is moderately dovish on balance, though he's covered his bases.