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He
made a reference to the Fed's 2011 Operation Twist, in which the
central bank sold shorter-dated Treasuries to buy longer-term
paper in a bid to bring down interest rates and stimulate the
economy, as a possible future option.
"I think there’s a general consensus... that we do want to go
shorter, to buy ourselves the option over time, if we ever had
to implement a twist like program again, we’d have that option,"
Harker told a business meeting in Frankfurt.
Harker, who participates in Fed policy discussions but does not
have a vote until next year, added that any shift in the
duration of the Fed's balance sheet would take "quite a while"
and there has been no decision yet on how to proceed.
But Harker downplayed concerns about the health of the U.S.
economy, arguing that the outlook remains good and this month's
shift in the Fed's interest rate expectation was not as
significant as sometimes portrayed.
The Fed last week abandoned projections for any interest rate
hike this year and expectations for future rate hikes shifted
down by one of the biggest margins since the bank started
publishing its so-called 'dot plot' of forecasts for the federal
funds rate.
"My dot... didn't come down that much because I wasn't up where
everybody else was," Harker told an OMFIF meeting. "The median
did shift down but it shifted down by one notch; sometimes we
overstate how much of a shift that was."
Harker added that he saw inflation rising up to 2.2 percent this
year before easing back to 2 percent.
(Reporting by Balazs Koranyi, Editing by William Maclean)
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