Federal Reserve Bank of Boston President Susan Collins favors a measured pace of rate increases to navigate two-sided economic risks. However, recent economic data and comments from Fed Governor Christopher Waller show some officials might still support a larger increase at the December policy meeting. Collins also acknowledged that labor strength and price data over the past three months might push the eventual rate peak higher than originally projected.
Key points
A gradual tightening approach allows the central bank to assess how past rate increases a…: A gradual tightening approach allows the central bank to assess how past rate increases are curbing economic demand.
Robust labor conditions and recent price trends could force the ultimate policy rate peak…: Robust labor conditions and recent price trends could force the ultimate policy rate peak higher than past forecasts.
Incremental rate adjustments provide policymakers with flexibility without locking the ce…: Incremental rate adjustments provide policymakers with flexibility without locking the central bank into a fixed tightening cadence.
Sources checked by our analysis pipeline: 1
A number of Fed officials have said a more measured pace of rate increases allows the economy time to adjust to the rise in borrowing costs.
BOSTON: Federal Reserve Bank of Boston President Susan Collins said on Saturday (Nov 14) she supported a steady pace of modest interest rate increases because that path of action better managed economic uncertainties.
When it comes to moving monetary policy to a tighter footing, "a steady, gradual path seems appropriate to me at the moment. But I'm open-minded," Collins told reporters at a conference held by her bank on housing issues in Boston.
“I do see the risks as two-sided on the real side of the economy," Collins said, with inflation high and its gains broadening throughout the economy, while the job market was stable with the potential to accelerate.
At the same time, there are the ongoing risks of more shocks hitting the economy, Collins said. Furthermore, “it's possible that the rise in medium to longer term rates that we've seen since the beginning of the year may actually weigh on demand more…
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