By Jason Lange
PHILADELPHIA Philadelphia Federal Reserve President Patrick Harker said he favoured raising interest rates and that the U.S. central bank might have to hike more aggressively if the incoming Trump administration enacts a fiscal stimulus."We may need to have a steeper path" of rate increases, Harker told reporters on Wednesday, adding that the Fed would try not to cause a recession with rate increases. The Fed has said it expects to raise rates gradually. But Republican Donald Trump's victory in America's Nov. 8 presidential election has led investors to bet inflation could rise if Trump follows through on his campaign promises to slash taxes and boost spending on defence and infrastructure.Harker does not have a vote on monetary policy this year but he will in 2017. The Fed is widely expected to raise rates next month after last hiking in December 2015. Trump's victory has also raised questions over whether the new administration and Congress could enact laws that would crimp the U.S. central bank's autonomy.
In a speech given earlier in the day, Harker said the Fed must retain its independence from America's political life and policymakers will not change course due to shifts in public opinion."The independence of the Fed is crucial to making the best decisions possible for the American economy," he said in the speech.
Trump in February expressed support for more rigorous audits of the Fed but has not spelled out his visions for the institution since winning the election. Republican lawmakers have proposed "audits" of the Fed that would force it to disclose more information about its decision-making process for interest rate policy. Harker echoed comments by Fed policymakers in recent months that their financial books are already audited by independent accountants. Fed officials say they need to maintain some secrecy over monetary policy decisions in order to avoid falling under political pressure.
"We don't respond to swings in public opinion or election cycles," Harker said.Currently, the Fed releases transcripts for its policy meetings five years after they take place, although it publishes the minutes of meetings after a few weeks. (Reporting by Jason Lange; Editing by Diane Craft)
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