On Monday (October 16th) local time, Philadelphia Fed Chairman Patrick Harker stated that the Federal Reserve could maintain interest rates at current levels and pointed out that the process of eliminating inflation is already taking place.
I believe we can now maintain interest rates at the current level. Deinflation is happening, the labor market is becoming more balanced, and economic activity continues to remain resilient
Huck said that keeping interest rates unchanged does not mean the Federal Reserve is "doing nothing", on the contrary, "I think we have done a lot of things". He predicts that the inflation rate in the United States will fall below 3% in 2024 and reach the target level of 2% thereafter.
Source: Mortgage Bankers Association
As the rotating voting committee of the Federal Open Market Committee (FOMC) this year, Huck's speech carries considerable weight. He pointed out that the trend assessment of disinflation is relatively complex, so he will not have a significant response to price fluctuations in monthly reports.
Since March last year, in order to cool demand and curb inflation, the Federal Reserve has implemented 11 rate hikes, totaling 525 basis points. At present, the target range of the federal funds rate has risen to between 5.25% and 5.5%, the highest level since 2001.
As for future policies, Huck emphasized that interest rates need to remain high for a period of time. "You may have noticed that I haven't told you how long interest rates need to remain high. I can say that I do agree with the statement 'higher for longer'
During the day, another FOMC voting committee member and Chicago Fed Chairman, Gullsby, also pointed out that the Federal Reserve is approaching a consensus that policy debate is shifting from raising interest rates to how high to how long interest rates need to be maintained at this level.
Huck also expressed his views on the economy clearly - he does not expect an economic recession. "GDP growth exceeded expectations earlier this year, and I expect it to continue until the end of 2023, and then slightly decline in 2024. But don't confuse a milder GDP growth rate with a contraction
He predicts that by the end of this year, the US unemployment rate will rise from the current 3.8% to around 4%, peak at 4.5% next year, and fall back to 4% by 2025. Huck also emphasized that he does not believe there will be large-scale layoffs nationwide.
When it comes to the real estate industry, Huck said that the current interest rate level almost deprives those who want to enter the real estate market of opportunities. He pointed out that high interest rates will hinder existing homeowners from listing and selling their homes, leading to a shortage of inventory.