Boston Federal Reserve President Susan Collins has spoken out Wednesday following her support for last week’s rate hike, saying there is “an increased likelihood” that inflation will remain “notably” above the Federal Reserve’s 2% target.
Explaining her rationale for supporting the Federal Reserve’s quarter-point interest rate increase last week, Collins stated in a LinkedIn post that a “somewhat more restrictive federal funds rate will help ensure that inflation durably returns to target.”
“Given all the available information, I now see an increased likelihood of future scenarios in which inflation remains notably above 2 percent,” Collins wrote.
“While the upside risks to inflation have increased, labor market conditions seem a bit stronger overall, and the unemployment rate remains low.”
“With the labor market on a better footing, monetary policy can focus on a timely return to price stability, especially after five and a half years of too high inflation.”
Collin’s comments come as markets remain broadly divided over the likelihood of another Fed rate hike at the October FOMC meeting.
Collin’s comments are consistent with those of Philip R. Lane, a member of the European Central Bank’s Executive Board, who stated on Tuesday that a “second wave of rising energy prices” is likely to keep inflation “higher for longer.”
Collins participates in FOMC meetings and helps shape the discussion, but she is not currently a voting member.
By CEO NA Editorial Staff
