Fed's Harker sees three interest-rate hikes appropriate for 2017

(Reuters) - Philadelphia Federal Reserve Bank President Patrick Harker on Wednesday repeated his view that the U.S. central bank should continue to raise interest rates this year, now that the U.S. economy is mostly back to full health.

Inflation, Harker said in remarks prepared for delivery to an economic outlook lunch hosted by La Salle University in Philadelphia, should be back to the Fed's 2-percent goal by late this year or next. Unemployment, at 4.8 percent, is already at or below levels consistent with full U.S. employment, he added.

"I see three (interest-rate) hikes as appropriate for 2017, assuming things stay on track," said Harker, one of the Fed's 10 voters this year on monetary policy. "With employment generally at our goal and inflation on track to meet it, the issue now is growth."

The U.S. economy, he forecast, will likely grow a touch faster than 2 percent this year. To boost it higher, he said, requires broad economic policies that can speed up productivity growth and bring more people into the labor force.

"The solutions to these problems lie in areas outside monetary policy," he said, adding that possible approaches include investment in education and infrastructure as well as pulling more people into the U.S. labor force from other countries.

(Reporting by Ann Saphir; editing by Diane Craft)

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