With inflation remaining stubbornly low, Federal Reserve Bank of Philadelphia President Patrick T. Harker said Wednesday he’s “penciled in” two rate hikes this year.

Federal Reserve Bank of Philadelphia President Patrick Harker
Federal Reserve Bank of Philadelphia President Patrick Harker Bloomberg News

“Based on the relatively strong economy, but the continued stubbornness of inflation, I’ve penciled in two hikes for 2018,” Harker told a gathering at St. Louis University, according to prepared text released by the Fed. “I use pencil because the data can change, and sometimes they don’t accurately point to future events. Like when they predict a Patriots Super Bowl win. The Fed’s mantra is data dependent, and for now, the data continue to tell me two is the likely appropriate path.”

While inflation has failed to hit the Fed’s 2% target in a long while, Harker said, “I do, however, forecast that it will reach, or exceed, that benchmark by the end of 2019.”

As for whether the Fed should reconsider its goal and strategy, he said he’s “open” to the idea, although he’s “not advocating for a change, and I don’t have any particular favorite in the alternatives.”

The economy, he said, “is doing pretty well,” with his expectations for GDP growth at 2.5% this year and “hovering around the 2 percent mark for 2019, and then edging further south.”

Employment remains “strong,” with his expectations for the unemployment rate dropping to 3.6% by mid-2019, before rebounding “a few tenths of a percentage point.”

While job creation should continue strong this year, as the labor market tightens, job creation will eventually slow, but that shouldn’t be a problems, he said, since “we won’t need much more than about 100,000 a month to keep up with population growth.”

Harker is not a voter in 2018.

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