Patrick Harker, President of the Philadelphia Federal Reserve said on Tuesday that the U.S. does not face a gloomy indicator and isn’t headed for recession despite higher interest rates.

In a CNBC interview this view is in direct contradiction to a looming inversionMarket expectations are that the Fed will soon begin to hike rates significantly in order to reduce inflation, based on the yields of 10- and 2-year Treasury bonds.

Harker stated that he believes the economic situation is stable enough to support both. tighter monetary policyfears in the bond markets about what this will mean for growth.

“What’s important to me is safety,” he stated to Sara Eisen at CNBC.Power Lunch” interview. The journey may not be smooth. You’ll be going down as bumpy as it was going up. It’s something we all have experienced. It’s safe, but the ride would be quite thrilling. That is not what I want. That’s why we are cautious about the way we apply policy.”

These comments were made with the curve about flatThe benchmark 10-year yield is different from its 2-year counterpart. In most of the recent U.S. recessions the curve has been inverted with the 2-year yield higher than the 10-year. However, it is not a sure thing.

Harker advised against depending too heavily on one relationship to be able to predict the future.

The evidence is not clear. The data clearly shows a correlation with recessions. However, the causality isn’t very obvious,” he stated. We need to ensure that we are looking at lots and different data.

Inversions of the yield curve are a sign that investors fear that the Fed may tighten its conditions to restrict future growth. These inversions can also be a deterrent to banks lending as they fear that their future returns might drop.

U.S. unemployment has returned to pre-pandemic levels, where the rate of joblessness was at its lowest point in 50 years. People are still able to afford their homes and cash is plentiful. Property values also continue to climb.

However, the Fed continues to struggle with high inflation. running at a 40-year highHarker and his associates decided to start a rate-hiking cycle, in which the markets are expecting increases at all six remaining meetings this year. This could possibly go as high as half of a percentage point.

Harker indicated that he believed the Fed should only raise its benchmark interest rate by 25% at its May meeting. This would mean a hike of 25 basis points. The markets are anticipating a rise of 50 basis points. Harker however stated that he was open to this idea, depending on the information.

“I would not take it off of the table,” he stated about the higher move.

He said that even with higher interest rates in the future, he believes the Fed is capable of navigating the current environment with an emphasis on decreasing inflation.

He said, “That’s my job one.” But I don’t want it to be too hard. Instead, let me just try to stomp on the brakes as hard as possible and allow growth to end.

He said, “It will be bumpy and there might be some issues where we get into an period of below-trend growing for a while.” But I believe we can do this.”