Having a positive view of the economy, Federal Reserve Bank of Philadelphia President and CEO Patrick T. Harker said Friday he expects two more rate increases this year.

Federal Reserve Bank of Philadelphia President and CEO Patrick T. Harker.
Federal Reserve Bank of Philadelphia President and CEO Patrick T. Harker. Bloomberg News

“So overall, things are looking good. We’re essentially at normal now, and based on the strength of the economy, I continue to see two more rate hikes as appropriate this year,” Harker said in a speech at Drexel University, according to prepared text released by the Fed.

Although the advance first quarter GDP showed just 0.7% growth, weak first quarters have been constant enough in the past several years to make them effectively the norm,” he said. He blamed “residual seasonality, weather effects, and modest inventory investment” for the poor quarter and termed them “likely temporary.”

Growth this year should be “about 2.3 percent,” Harker suggested, “a very slight downward revision of my previous estimate — only 0.1 percentage point, which reflects that slow first quarter growth.”

Inflation should “stabilize” at the Fed’s 2% target by yearend, he said, “we’re looking at a labor market more or less at full health, with very little slack.”

The unemployment rate could drop “as low as 4.2% at the end of next year,” with “average job growth of about 200,000 a month for 2017. That pace should ease down to about 100,000 jobs a month by the end of 2019.”

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