Fed's Harker Says November Inflation Data Likely Distorted, Neutral Rate May Exceed Common Estimates

Philadelphia Fed President Patrick Harker said on Dec. 21 that November's positive inflation reading may have been distorted by data collection issues tied to the government shutdown in October and early November, potentially understating 12-month price growth, BlockBeats reports citing Jin10. While the Bureau of Labor Statistics reported November CPI rose 2.7% year-on-year, estimates adjusted for measurement challenges place inflation closer to the widely expected 2.9% to 3.0% range. Harker added his main concern about cutting rates stems from his view that the neutral interest rate is higher than generally assumed and that the economy already shows momentum to sustain solid growth next year, though the neutral rate cannot be directly observed and must be inferred from economic performance.