PHILADELPHIA The U.S. economy is back to normal, the labor market is healthy again and inflation is headed higher, a hawkish Federal Reserve official said on Tuesday in repeating that he expects the Fed to raise interest rates three times this year.
"Given the state of the economy, more or less back to normal, I continue to see three modest rate hikes of 25 basis points each as appropriate for 2017, assuming things stay on track," Philadelphia Fed President Patrick Harker said in a speech that largely repeated recent comments on the economy and policy.
Harker, who votes on monetary policy this year under a rotation, said he expects inflation to hit a 2 percent Fed target this year or next.
In part this is because the labor market is "more or less back to full health," even while it continues to tighten and as wages have more room to grow, he told students at the Wharton School of the University of Pennsylvania.
The U.S. central bank has raised rates twice in the last two years but expects to pick up the pace of tightening now that unemployment, at 4.8 percent, should keep pushing inflation higher after years below the Fed target.
Median forecasts show Fed officials expect to hike rates three times this year. Their next policy meeting is mid-March.
(Reporting by Jonathan Spicer; Editing by Meredith Mazzilli)