March US Interest Rate Hike 0.5% Point? ... Fed Officials Expressing Negative Views

Patrick Harker President "25bp Four Times This Year Appropriate"

[Asia Economy Reporter Seo So-jeong] As attention focuses on the number of interest rate hikes in the United States, Patrick Harker, President of the Federal Reserve Bank of Philadelphia (pictured), stated that he expects four 25bp (1bp=0.01 percentage point) rate hikes this year. He also expressed a negative stance on the possibility of a 0.5 percentage point rate hike in March.

According to Bloomberg News, in an interview with Bloomberg TV on the 1st (local time), President Harker said, "I support a 25bp rate hike in March," adding, "To normalize with a 50bp rate hike in March, inflation would have to surge once again."

President Harker mentioned, "While a 50bp rate hike in March is possible, I am somewhat less certain about whether it should be done."

However, he did not completely rule out the possibility of a 50bp rate hike. President Harker said, "If the inflation rate stays at the current level and then starts to decline, I do not expect a 50bp rate hike," adding, "But if we witness a sharp rise in prices, we may need to act more aggressively."

He explained that he will make a final decision after observing the consumer price indices for January and February, which will be released before the base rate decision next month.

Additionally, as a temporary voting member of the Federal Open Market Committee (FOMC), President Harker stated, "For now, I think it is appropriate to raise rates by 25bp four times this year."

James Bullard, President of the St. Louis Fed, also said in an interview with Reuters on the same day, "I do not think a 50bp rate hike would be helpful at this time," adding, "(How much to raise rates) is still an undecided issue."

Meanwhile, the regular meetings of the U.S. FOMC are scheduled for March, May, June, July, September, November, and December. Market analysts generally expect the number of U.S. rate hikes to be around three to four times this year, but recently, forecasts have emerged suggesting that rates could be raised up to seven times.

Bank of America expects the Fed to implement seven 0.25 percentage point rate hikes within the year, while Japanese investment bank Nomura Securities anticipates the Fed will announce a 0.50 percentage point hike in March.