Fed's Harker wants to raise rates 'sooner, rather than later'

[WASHINGTON] Federal Reserve policy makers should begin raising interest rates to get ahead of inflation and avoid "falling behind the curve," Philadelphia Fed President Patrick Harker said.

"I tend to be in the camp of normalizing sooner, rather than later," he said Thursday in Dublin during an interview on Bloomberg Television with Michael McKee. He said the Fed was making progress toward its target for 2 per cent inflation and "I am somewhat concerned about falling behind the curve," he said.

Policy makers left interest rates unchanged last week in a decision that drew a rare three hawkish dissents in favour of a quarter percentage-point hike. Fed Chair Janet Yellen told lawmakers in Washington on Wednesday that the current course of the economy calls for a gradual increase in rates, though that outlook doesn't have a fixed timetable.

She reiterated on Wednesday that most members of the policy-setting Federal Open Market Committee expect a rate increase this year. That has economists looking to the Fed's December meeting because the November gathering comes within a week of the US election and isn't followed by a press conference.

Mr Harker, who became president of the Philadelphia Fed in July 2015 and will vote on policy next year, said that every FOMC meeting was "live" for a policy decision.

"To take any meeting of the table is a mistake," he said.

The central bank raised rates late last year, but it's delayed a follow-up increase amid overseas risks and as it waited for further evidence that the US economy has healed.

BLOOMBERG