Boston Fed President Susan Collins favors a measured pace of further rate increases. She sees risks to the economy as balanced and says recent data point to somewhat higher rates over the coming year than she expected a few months ago.
Federal Reserve Bank of Boston President Susan Collins favoured a measured approach to further rate increases, arguing that gradual tightening gives the US economy more room to absorb uncertainty. Policymakers are trying to bring inflation back to target.
Collins spoke to reporters on Saturday at a Boston Fed housing conference. She said risks to the economy remained balanced, with inflation pressures still elevated and a labour market that showed signs of stability and could strengthen further, Reuters reported.
However, she also pointed to the possibility of further shocks. Collins said the rise in longer-term borrowing costs since the start of the year could weigh more heavily on demand than she currently anticipates. For that reason, she argued against accelerating the pace of increases to tackle inflation, which has stayed above the Fed's 2% target for more than five years.
She did not commit to a fixed schedule. Collins said a preference for gradual tightening should not be read as a commitment to a set timetable of increases. Price data over the past three months and evidence of a firmer labour market led her to expect rates over the coming year could end up somewhat higher than she anticipated a few months ago.
The Fed last raised rates in September, taking its target range to 3.75%-4%. Markets widely expect another 25-basis-point increase at the December 8-9 meeting, followed by a further move in January.
Recent inflation readings and comments from Fed Governor Christopher Waller have strengthened expectations of a larger move in December. Collins' comments suggest she sees a case for continued tightening, but not necessarily a more aggressive pace.
Source: Investing.com
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