LONDON, June 27 (Reuters) - Balance sheet normalisation should be put on "autopilot", Philadelphia Federal Reserve Bank President Patrick Harker said on Tuesday.
"I do think it is important for us, for a variety of reasons, to get on with the normalisation of the balance sheet," said Harker, one of the Fed's current voting board members, during a European Economics and Financial Centre event in London.
"In my view we want to put that on autopilot and to use the Fed funds rate as the variable that we would move depending on how the data transpires."
"And if that means delaying a rate increase, we do that," he added.
"It is possible that we are entering a low inflation world. But the pragmatist in me says let's wait and see how this plays out."
The Federal Reserve raised U.S. interest rates for the second time this year last month but it was only the fourth time since the collapse of Lehman Brothers ignited the global financial crisis.
Its basic message is now that the recent drop back in inflation will be transitory and that it might start the process of shrinking its balance sheet again before its next rate hike.
Reporting by Marc Jones and Helen Reid