Why One Fed Official Is Ready to Stop Raising Rates

livemint.com:

The Federal Reserve should extend its pause on interest-rate increases because of growing evidence that higher borrowing costs will slow the economy despite recent signs of hiring and spending strength, a top central bank official said. Philadelphia Fed President Patrick Harker in a Tuesday interview said he thinks the central bank can likely wait until early next year to decide whether rapid rate increases over the past 20 months have done enough to keep inflation heading lower. “This is a time where we just sit for a little bit.

It may be for an extended period; it may not. But let’s see how things evolve over the next few months," said Harker, who has a vote on interest-rate policy this year. While recent economic data have been surprisingly brisk, Harker said anecdotal, on-the-ground reports from business “contact after contact after contact is that things seem to be slowing down." For example, bankers have reported more business loans are coming due and will need to be renewed at much higher rates.

“They’re concerned that some of those businesses and their business models will not be able to survive those higher rates," said Harker, a former university president. The Fed most recently raised rates in July to a range between 5.25% and 5.5%, a 22-year high. Several officials have signaled over the past week that they are comfortable holding rates steady at their Oct.

31-Nov. 1 meeting. That would extend a pause in rate rises from their September meeting.