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Fed's Collins says gradual rate hikes best to manage economic risks
Reuters • • business
Key Points:
- Federal Reserve Bank of Boston President Susan Collins supports a steady, gradual pace of modest interest rate increases to better manage economic uncertainties and inflation risks.
- Collins highlighted two-sided risks: persistent high inflation and a stable job market with potential acceleration, alongside possible shocks and rising medium to long-term interest rates that could restrain economic demand.
- She cautioned against shifting to more aggressive rate hikes despite inflation exceeding the Fed’s 2% target for over five years, favoring measured increases to allow the economy to adjust.
- The Fed is widely expected to raise interest rates by a quarter percentage point in December and again in January, with some officials considering larger increases due to recent price data.
- Collins noted recent data suggests the policy rate path might be higher than previously anticipated, but she remains open-minded about the pace of future rate adjustments.
