Philadelphia Federal Reserve Bank President Patrick Harker on Monday said he would be open to raising interest rates again at the U.S. central bank's March meeting if growth in jobs and wages continues.
"I still am supportive of three rate hikes this year, of course with a major caveat, depending on how the economy evolves and policy, fiscal policy, evolves," Harker told reporters after a speech on the regulation of fintech firms." I think March should be considered as a potential for another 25-basis point increase."
The Fed raised rates for only the second time since the financial crisis in December, and most Fed policymakers agree with Harker that three more rate hikes this year would be appropriate. Wall Street banks and interest-rate futures traders are betting the Fed will only lift borrowing costs twice this year, starting in June.
Harker, one of 10 voters this year on the Fed's rate-setting panel, said that to support a rate hike he would need to see further GDP growth and continued strengthening of the labor market, "not just in terms of the job numbers but also seeing continued wage growth and income growth because that will ultimately feed into inflation."
U.S. employers added more jobs last month than expected, but hourly wages increased by only three cents, suggesting there is still room for the job market to improve before there is much upward pressure on prices.
"I don't think we are behind the curve now," Harker added. "I want to make sure we don't get behind the curve."
Harker tread carefully when it came to questions about how policies under President Donald Trump might affect the economy. He said he had not seen enough details of the new administration's tax or infrastructure plans to make any judgment about how they would impact growth.
And while he said that broadly immigration can boost economic growth, and that limits could drive some firms to locate jobs overseas instead of at home, he made no specific comments about the travel ban and immigration restrictions included in an executive order from Trump just over a week ago.
Asked about Trump's plans to roll back parts of the Wall Street reform act enacted after the financial crisis, Harker said that the legislation had contributed to financial stability, and urged thoughtfulness when considering changes.
He also raised the importance of protecting against cyber threats, saying that it was now the topmost concern of small banks surveyed by the Philadelphia Fed.
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