Philadelphia Fed President Patrick Harker said in a speech in London that “potential risks tilt very slightly to the downside” in the US. Though he emphasized the work “slight” as he saw “outlook as positive” and economy “continues to grow” and is on pace to the the longest economic expansion in history.

Harker added there was “continued strength” in the labor market. He’d “cautious against” getting caught up in a single data point in February’s dismal job data. Meanwhile, inflation is running around 2% target and “does not appear to be on a strong upward trajectory”. Rather inflation is “edging slightly downward”.

Combining all, Harker stays in “wait-and-see mode”. He expects “at most, on rate hike this year, and one in 2020”. But his stance will be “guided by data”.

Harker’s full speech here.

More from Chicago Fed President Charles Events. He warned that “at the moment, the risks from the downside scenarios loom larger than those from the upside ones”. And, “if activity softens more than expected or if inflation and inflation expectations run too low, then policy may have to be left on hold — or perhaps even loosened — to provide the appropriate accommodation to obtain our objectives.”

On the other hand, “if growth runs close to its potential and inflation builds momentum, then some further rate increases may be appropriate over time to ensure that the economy settles in on its long-run sustainable growth path and that inflation runs symmetrically about our 2 percent target”. He added “in this scenario, the path for rates will depend crucially on any signals of an acceleration in core inflation.”

Though, he emphasized that US economy is still in good shape. He pointed to Fed’s forecasts of 1.75-2.0% GDP growth in 2019. Evans said “the lower end of this range is actually in line with my view of the economy’s long-run growth potential. So we’re not looking at a bad number.” Though, “:the economy won’t feel like it is doing very well compared with last year’s very strong performance.”

Chicago Fed President Charles Evans said at a conference in Hong Kong that he now doesn’t expect a rate hike until second half of next year. He noted the US economy is in a strong position. Fed funds rate is seen as close to neutral. And it’s good time to pause and be cautious. Yet, that’s a rather abrupt turn as just back in January, he expected Fed could hike as many as three times this year, assuming the economy remains reasonably strong.

Evans described the inversion of 3-month to 10-year yield curve as “pretty narrow”. But he also noted that there’s be a “secular decline” in long term interest rates. Some of his is “structural” having to do with “lower trend growth, lower real interest rates.” Hence, “in that environment, it’s probably more natural that yield curves are somewhat flatter than they have been historically.”