FX.co ★ Philadelphia Fed backs December rate hike

Philadelphia Fed President Patrick Harker intends to support the increase rate hike at a December meeting of the US Federal Reserve.

He will back a rate hike despite caution over low-inflation, as the US central bank needs to prepare to deal with future economic shocks.

Meanwhile, Harker noted that he “continues to elicit caution” about weak inflation.

The US inflation has lagged the central bank’s 2% target despite the fall in the unemployment rate. In October, the US unemployment rate declined from 4.2% to 4.1% to the lowest level since December 2000.

So far this year, the Fed raised interest rates twice and is most likely to hike again in mid-December. Meanwhile, the US regulator is paring down its $4.5 billion balance sheet.

At its meeting on October 31 and November 1, the FOMC left the Fed Funds target unchanged at 1%-1.25%.