Fed’s Harker Says Interest-Rate Cuts Should Be ‘Methodical’

(Bloomberg) -- Philadelphia Fed President Patrick Harker said it is time for the US central bank to start cutting interest rates and emphasized the path down should be “methodical.”

“It’s time to start the process,” Harker said on Bloomberg Television Friday on the sidelines of the Kansas City Fed’s annual central bank symposium in Jackson Hole, Wyoming, where Chair Jerome Powell opened the day by saying “the time has come for policy to adjust.”

The Philadelphia Fed chief, who does not vote on policy decisions this year, said contacts in his district are telling him “don’t just start and stop” once rate cuts begin.

“I like the word ‘methodical,’” Harker said, echoing remarks he made Thursday. “Just start the process and keep it moving,” he added.

Federal Reserve officials next meet on September 17-18, and are widely expected to lower rates by a quarter percentage point. Less certain is how quickly borrowing costs will come down after that. Powell made clear Friday that policymakers are on course to begin cutting next month, but stopped short of offering any hints on the pace of reductions after that, saying decisions will be guided by incoming data.

Harker said he didn’t see a “large” risk that the unemployment rate will rise abruptly, and noted that officials don’t expect it to rise above 5%.

Harker said the end point of rate cuts, a level that neither stimulates nor slows economic growth, could be around 3%.