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Fed's power limited over long-term US growth: Harker
[NEW YORK] The Federal Reserve has very limited power to boost growth prospects for the US economy, which will likely grow at only subdued levels over the next few years, a top Fed official said on Tuesday.
In a speech that took the unusual step of suggesting fiscal policies that would boost the economy's potential, Philadelphia Fed President Patrick Harker downplayed prospects of a strong economic rebound from a current growth rate of about 2 per cent.
The US central bank last week stood pat on interest rates and downgraded its expectations for the economy due to risks from abroad and early-year market turmoil.
Mr Harker, who took the reins in Philadelphia less than a year ago, offered a glimpse of the battle within the Fed's policy-making committee, saying that uncertainty over potential growth is "at the heart of the genuine disagreements" its members have over rate decisions.
But even the best monetary policy "can affect these factors only marginally," he said at a dinner of the Money Marketeers bond traders in New York.
"Thus there are limits to what good monetary policy can do for us." Mr Harker did not discuss rate hikes in his prepared remarks.