NEW YORK (Reuters) - A Federal Reserve policymaker said on Thursday he expects more interest rate hikes this year than he previously predicted, thanks to fiscal stimulus and stronger U.S. economic growth.
Philadelphia Fed President Patrick Harker said two more hikes would likely be appropriate this year, after the U.S. central bank raised rates last week. Last month, Harker said he expected two total policy tightenings in 2018.
His hawkish shift reflects the Fed’s move to a slightly more aggressive policy stance, including projections of more rate hikes over the next few years as inflation is expected to finally rise above target in 2019.
“On the heels of a strengthening outlook, I see two additional rate hikes this year as appropriate,” Harker told the New York Association for Business Economics. He added the forecast is “written in pencil” and could again change, “but overall things are looking pretty good.”
Harker, who does not vote on policy this year, said thanks in part to the recent U.S. tax cuts and government spending he now expects about 2.6 percent economic growth this year, 2.4 percent in 2019, and closer to 2 percent after that.
Reporting by Jonathan Spicer; Editing by Chizu Nomiyama