Patrick Harker, Philadelphia Fed President, believes that the central bank should take its time before deciding the fate of interest rate increases, writes Nick Timiraos for the Wall Street Journal.

“This is a time where we just sit for a little bit … let’s see how things evolve over the next few months,” said Harker. 

There is growing evidence that higher borrowing costs will slow the economy.

Namely, bankers have reported that more business loans are coming due and will need to be renewed at much higher rates, putting a potential threat on some businesses’ ability to survive. 

In addition, higher borrowing costs traditionally weaken investment and spending.

The Fed most recently raised interest rates in July. Its 5.25 percent to 5.5 percent range was the highest in 22 years. Meanwhile, inflation has slowed since June. 

Harker believes it would be appropriate for the Fed to consider lowering interest rates once inflation is within a reasonable of the central bank’s 2.5 percent target.

“If we get into the range … [and] we’re continuing to move down, then something like that would at least have me considering whether or not it’s time for rates to start coming down,” he said. 

Learn more about how Patrick Harker believes the Fed should operate in the coming months at the Wall Street Journal.

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