Philadelphia Fed President Patrick Harker said in a WSJ interview that he now expects three Fed rate hike this year. Harker is seen as on the dovish side of the spectrum as he previously projected just two hikes in 2018.
He pointed to “some firming of inflation” as he reason for the upgrade is his own forecast. He also clarified that he placed more emphasis on inflation than fiscal policy.
And to us, this could be a hint on a major difference between Fed’s hawks and doves. The hawks anticipate the growth and inflation impact of the tax cut and other policies. Meanwhile, seeing is believing for the doves.
Nonetheless, Harker also sounded cautious on trade tensions. He noted that risk of increasing trade tariffs as a source of uncertainty for both economic projections and monetary policy.
