A big question for the Fed is how long they're willing to tolerate high inflation and Harker waded into that debate with his latest comments. He said that "as long as we're moving consistently to collapse inflation down, we can pause." He added "I don't want to move interest rates way up and then way down."
So if there's a slow decline in inflation to 4% at the end of 2023, that might be enough for the Fed to simply leave rates where they are, rather than hiking them further. It's more evidence that 5% is seen as the top at the FOMC, or at least that's the base case.
The alternative case would be to hike further, crush inflation and then cut rates. There is a case to do that but it doesn't look like Harker wants to go in that direction.
