won’t take May rate cut off the table

Philidelphia Federal Reserve (Fed) President Patrick Harker hit newswires Thursday, noting that while the Fed is approaching the point of cutting rates, policymakers remain unsure of when specifically that might happen.

Key highlights

• Fed near point of cutting rates, but unsure of when.
• Disinflation trend has picked up pace, Fed is in the ‘last mile’ towards 2% inflation.
• Recent CPI figures show uneven progress on inflation.
• Fed’s Harker needs more confidence on inflation progress.
• Cutting rates too early remains the greatest risk to Fed.
• Fed’s Harker is on board with slowing down the pace of balance sheet contraction before outright halting.
• US GDP continues to be stronger than expected.
• The Fed can hold rates for now, no rush to cut.
• Fed’s Harker is particularly focused on labor market, jobs will determine when to cut.
• May rate cut is possible, but not the current forecast. A couple more months of positive data would convince Fed’s Harker of need to cut.
• Fed is close to cutting, just needs a couple more meetings.