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President of the Federal Reserve Bank of Philadelphia, Patrick Harker, said in a TV interview with Bloomberg that the Fed should maintain interest rates until the inflation target is achieved.
“We’ve been saying for a long time that the 2% inflation goal is symmetric, which means we should overshoot it. We were having a difficult time doing that, like all developed economies.”
“I’m supportive of the idea of letting inflation get above 2% before we take any action with respect to the fed funds rate.”
“There are things I worry about. One is a cliff effect of unemployment insurance.”
“Yes, there is a need to get people back to work, and people want to go back to work. But we can’t just cut it off, because if we cut it off, people will stop spending and that will be a hit on the economy.”
“Forward guidance constitutes a vital way to provide the necessary accommodation.”
“Refraining from liftoff until inflation reaches 2% could lead to some modest temporary overshooting, which would help offset the previous underperformance.”
