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Fed's Collins Backs Steady Rate Hikes Amid Uncertainty
15 Nov
Summary
- Collins supports gradual interest rate increases to manage economic uncertainties.
- Inflation remains high, broadening across the economy.
- Future rate path may be higher than previously anticipated.
Federal Reserve Bank of Boston President Susan Collins has expressed support for a steady and gradual approach to interest rate increases. She believes this strategy is currently the most appropriate for navigating economic uncertainties. Collins noted that inflation has remained high and is becoming more widespread throughout the economy, while the job market shows stability and potential for growth.
Collins also pointed out the ongoing risks of unforeseen economic shocks. She mentioned that the rise in medium to longer-term interest rates since the start of the year could potentially dampen demand more than expected, acting as an additional restraint on economic activity. These factors suggest that an aggressive pace of rate hikes to curb inflation might not be the best course of action.
Looking ahead, Collins indicated that recent price data and labor market strength suggest the path for policy rates over the next year might be higher than anticipated just a few months ago. The Federal Reserve is widely expected to implement another quarter-percentage-point rate hike at its upcoming December meeting, with further increases possible in January.
