(Reuters) – The U.S. Federal Reserve should raise interest rates above 3% by the end of this year and then reassess how much more it needs to do to bring inflation down in part due to the tightening impact of the central bank reducing its balance sheet in tandem, Philadelphia Fed President Patrick Harker said on Wednesday.

“We don’t have to overreact in terms of the fed funds rate,” Harker said during a conference held by the regional Federal Reserve bank. “We need to get above neutral, again I’d like to get above three, but I don’t think you have to accelerate rapidly beyond that at this point until we get a better understanding of what exactly the quantitative tightening is doing.”

(Reporting by Lindsay Dunsmuir; Editing by Chizu Nomiyama)