Philadelphia Fed President Patrick Harker is shown doing a television interview during the Fed’s Jackson Hole summer retreat.
Philadelphia Federal Reserve President Patrick Harker said Friday he thinks the central bank should sit on the sidelines until it is clear how downside economic risks play out.
“My own view is that we should hold firm, letting things settle and watching how events play out,” Harker said in a speech to the Shadow Open Market Committee, a group of monetary policy experts based in New York.
The economy does face downside risks, Harker said, mostly posed by trade and international developments and “the uncertainty they breed.”
However, Fed interest-rate policy “can’t mitigate risk,” Harker said.
“The Fed can pull the levers available to us to create a more hospitable environment for growth, but trend economic growth is driven by fiscal policy,” Harker said.
The U.S. central bank has cut interest rates twice in as many months to try to cushion the economy from risks.
Fed officials are divided about the way forward, with seven of 17 officials calling for another rate cut by the end of the year. Economists think that group includes Fed Chairman Jerome Powell and his close leadership team, Vice Chairman Richard Clarida and New York Fed President John Williams.
Recession fears are rising due to the U.S.-China trade war.
In an earlier interview on the Fox Business Network, Harker said he thought the economy “is still in very good shape” and the consumer “has been holding up quite well.”
He noted that job growth was trending at 100,000 net new jobs per month, which is a “steady state” for the labor market.
“What I worry about, though is if we start to see those things drift down significantly I would be open to a rate cut, but not now,” he said.