Fed’s Collins expresses hope inflation can be brought under control without hitting jobs

Susan Collins, Boston Federal Reserve

Source: Federal Reserve Bank of Boston

Boston Federal Reserve Chair Susan Collins said she was confident Friday that policymakers can get inflation under control without hurting jobs too much.

“By raising rates, we aim to slow the economy and better balance labor demand with supply,” Collins said in prepared remarks for a Boston Fed labor market conference. work. “The intention is not for a significant slowdown. But restoring price stability remains the current imperative and clearly there is still work to be done.”

She spoke as the Fed is in the midst of an aggressive campaign to bring down runaway inflation.

A series of rate hikes brought the central bank’s overnight borrowing rate into a range of 3.75% to 4%, and virtually every other Fed official said they expected to further increases.

In his remarks, Collins noted the importance of reducing inflation and acknowledged that the Fed’s actions could come at a price. Collins is a voting member of the Federal Open Market Committee responsible for setting rates, which will then meet on Dec. 16. 13-14, when his funds are widely expected to value another half percentage point.

“I remain optimistic that there is a path to restore labor market balance with only a modest increase in the unemployment rate – while remaining realistic about the risks of a deeper downturn,” he said. she said, adding that she thinks “there is a way to restore price stability with a slowing labor market that results in only a slight rise in the unemployment rate.

His comments follow a flurry of similar remarks from his colleagues.

St. Fed Chairman James Bullard shook markets on Thursday when he said the funds rate may need to rise to as much as 7%. Other officials also said they saw more increases and expected rates to remain high.

Markets took some hope in a report last week showing that the pace of increases in inflation has slowed. But Collins said “the latest data has not reduced my sense of what restrictive enough can mean, nor my resolve.

“Sufficiently restrictive” is a benchmark the Fed has set for itself to determine where rates should go to bring inflation down. Current projections are around 5%, although that could change when FOMC members submit their revised outlook for rates and the economy at next month’s meeting.

“At the Fed, we are committed to bringing inflation back to the 2% target within a reasonable timeframe. It’s only when inflation is low and stable that the economy in general — and the job market in particular — can work well for all Americans,” Collins said. said.

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