Boston Fed backs gradual rate hikes as inflation risks persist
With the Federal Reserve nearing another policy decision, Boston Fed President Susan Collins says a steady path of modest interest rate increases is the best way to manage uncertainty in the economy. She says inflation remains high and broad-based, but also warns that higher longer-term rates and other shocks could restrain demand more than expected.
Highlights
- Boston Fed President Collins advocates a steady, gradual pace of rate hikes due to persistent inflation and balanced economic risks.
- Collins warns that increases in medium- to longer-term rates since early 2023 may restrain economic activity and weigh on demand more than expected.
- Markets anticipate the Fed will raise its 3.75% to 4% target range by 25 basis points at the Dec. 8-9 meeting, with some policymakers open to a larger hike.
Collins outlines case for measured tightening
As reported by Reuters, Collins tells reporters at a housing conference in Boston that a steady, gradual path for tighter monetary policy seems appropriate at the moment, while stressing that she remains open-minded. She says the risks are two-sided, with inflation still elevated and spreading across the economy, even as the job market remains stable and could strengthen further.Collins also says ongoing risks of new shocks hitting the economy argue against moving to a more aggressive pace of rate rises. She adds that the increase in medium- to longer-term rates since the start of the year may weigh on demand more than she currently expects and could further restrain economic activity.
For now, she says those factors support caution even as inflation has remained above the Fed's 2% target for more than five years. Collins also cautions that a gradual approach does not necessarily imply a fixed cadence for future moves.
Policy outlook shifts as data stays firm
The Fed last raised rates in September, and markets widely expect the central bank to lift its 3.75% to 4% target range by a quarter percentage point at its Dec. 8-9 policy meeting, followed by another increase in January. Most Fed officials have signaled support for steady, smaller increases to give the economy time to adjust to higher borrowing costs.Still, last week's price data and comments from Fed Governor Christopher Waller suggest some policymakers may favor a larger increase next month. Collins says recent inflation readings and a stronger labor market make her think the path of policy rates over the next year may be somewhat higher than she had expected a couple of months earlier.
Earlier, we reported on intensifying inflation pressures as Chicago Fed President Austan Goolsbee said the central bank still has work to do.
Latest Centralbanks News
-
Afghanistan
-
Albania
-
Algeria
-
Angola
-
Argentina
-
Armenia
-
Australia
-
Austria
-
Azerbaijan
-
Bahamas
-
Bahrain
-
Bangladesh
-
Belarus
-
Belgium
-
Bolivia
-
Botswana
-
Brazil
-
Brunei
-
Bulgaria
-
Cambodia
-
Cameroon
-
Canada
-
Chile
-
China
-
Colombia
-
Congo
-
Costa Rica
-
Cote d'Ivoire
-
Croatia
-
Cuba
-
Cyprus
-
Czechia
-
DR Congo
-
Denmark
-
Dominican Republic
-
Ecuador
-
Egypt
-
El Salvador
-
Estonia
-
Eswatini
-
Ethiopia
-
Finland
-
France
-
Georgia
-
Germany
-
Ghana
-
Greece
-
Haiti
-
Hong Kong
-
Hungary
-
India
-
Indonesia
-
Iran, Islamic republic
-
Iraq
-
Ireland
-
Israel
-
Italy
-
Jamaica
-
Japan
-
Jordan
-
Kazakhstan
-
Kenya
-
Korea
-
Kuwait
-
Kyrgyzstan
-
Laos
-
Latvia
-
Lebanon
-
Lesotho
-
Libya
-
Lithuania
-
Luxembourg
-
Madagascar
-
Malaysia
-
Malta
-
Mauritius
-
Mexico
-
Moldova
-
Mongolia
-
Montenegro
-
Morocco
-
Mozambique
-
Myanmar
-
Namibia
-
Nepal
-
Netherlands
-
New Zealand
-
Nigeria
-
North Macedonia
-
Norway
-
Oman
-
Pakistan
-
Palestine
-
Panama
-
Papua New Guinea
-
Paraguay
-
Peru
-
Philippines
-
Poland
-
Portugal
-
Puerto Rico
-
Qatar
-
Reunion
-
Romania
-
Rwanda
-
Saudi Arabia
-
Serbia
-
Singapore
-
Slovakia
-
Slovenia
-
Somalia
-
South Africa
-
Spain
-
Sri Lanka
-
Sweden
-
Switzerland
-
Syria
-
Taiwan
-
Tajikistan
-
Tanzania
-
Thailand
-
Trinidad and Tobago
-
Tunisia
-
Turkey
-
UAE
-
Uganda
-
Ukraine
-
United Kingdom
-
United States
-
Uruguay
-
Uzbekistan
-
Venezuela
-
Vietnam
-
Yemen
-
Zambia
-
Zimbabwe
- Forex
- Crypto
