ATFX - The "strongest voice" among Fed doves: The rate hike cycle may be over

atfxOn Tuesday, Philadelphia Federal Reserve President Chuck Harker, who is widely regarded as a dove, said that unless there is a sudden change in the direction of economic data in the near future, the Federal Reserve may be at a stage where it can keep interest rates unchanged, that is, the current rate hike cycle of the Federal Reserve may be over.

In a prepared speech in Philadelphia, Mr. Harker said that "in the absence of any worrisome new data between now and mid-September, I believe we are likely to be patient, hold interest rates steady and allow the monetary policy actions we have taken to work".

In the responses of Federal Reserve officials so far on whether to raise interest rates at the September meeting, Harker's current remarksProbably the most powerfulHarker has voting rights in the FOMC this year and supported last month's rate hike

However, Mr. Harker also said that if it was appropriate to stop raising rates, "we need to [maintain peak rates] for a while", meaningInterest rate cuts are unlikely in the short term"The epidemic teaches us never to say never, I expectThere won't be any immediate easing of policy rates", he said.

According to CME Group data, the market expects a more than 85% chance that the Federal Reserve will leave interest rates unchanged at its September meeting, with the first rate cut likely as early as March 2024.

Like other Fed officials, Mr. Harker expressed satisfaction with recent data showing that inflation has fallen sharply from a 40-year high a year ago, and he expects that to continue.

Harker said he now expects,The personal consumption expenditure price index (PCE), after food and energy costs, will fall to just under 4% by the end of the year and below 3% in 2024 before "reaching the target level of 2% in 2025."

The Federal Reserve raised its benchmark policy rate by 25 percentage points to a range of 5.25-5.50 per cent at its meeting last month. Policymakers' forecasts at the June meeting indicated that most officials expected two more increases this year, but the recent easing in inflation has sparked a fierce debate on the issue.

Mr. Harker said he expected the unemployment rate to "rise slightly" to better match the natural rate, which unexpectedly fell to 3.5 per cent in July, near a half-century low.

He also expects gross domestic product growth to slow more recently, with the US growing at an annualised rate of 2 per cent in Quarter 1 this year and 2.4 per cent in the second quarter.

He said, "Anyway, IEconomic activity is expected to slow only slightly, and inflation is expected to decline slowly but firmlyIn other words, I do see that we are on a soft landing path, even though this has proven elusive in the past. "

In addition, Harker did express some concerns about the impact that a recovery in commercial real estate and student loan payments would have on the broader economy.