Jobless rate will not peak above 5%

Federal Reserve (Fed) Bank of Philadelphia Patrick Harker hit newswires on Friday, noting that Fed moves on interest rates need to be “methodical”, telegraphing that policymakers are targeting a series of cuts through the rest of 2024 as the US central bank gears up for a dovish pivot.

Key highlights

We need to start moving rates down.

The Fed should start the process of cuts, and keep moving.

I don’t see large outsize risk of labor deterioration. In our view, the jobless rate will not peak above 5%.

Contacts urging the Fed not to stop and start rate cuts.

The neutral rate is somewhere around 3%.