Fed’s Collins expresses hope that inflation can be tamed without hitting jobs

Susan Collins, Boston Federal Reserve

Source: Federal Reserve Bank of Boston

Boston Federal Reserve President Susan Collins expressed confidence on Friday that policymakers can lower inflation without causing significant damage to jobs.

“By raising rates, we’re looking to slow the economy and bring labor demand into better balance with supply,” Collins said in remarks prepared for the Boston Fed’s labor market conference. “The goal is not a significant drop. But restoring price stability is still a requirement now and clearly there is a lot of work to be done.”

He spoke as the Fed is in the midst of an aggressive campaign to lower inflation.

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A series of rate hikes brought the overnight lending rate to 3.75%-4%, and almost all other Fed officials said they expected more hikes to come.

In his remarks, Collins noted the importance of reducing inflation and noted that the Fed’s actions could be costly. Collins is a voting member of the rate-setting Federal Open Market Committee, which comes next Dec. 13-14, when it is most likely to increase its income by another half a percent.

“I remain optimistic that there is a way to re-establish the balance of the labor market with a small increase in the unemployment rate – while I remain positive about the risks of a large downturn,” Collins said, adding that he thinks “there is a way. to restore price stability through a decline in the labor market that involves a modest increase in the unemployment rate.”

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His comments followed a flurry of similar comments from his colleagues.

The president of St. Some officials say they see further increases and expect prices to stay higher.

Markets took hope from a report last week showing that the pace of inflation has slowed. But Collins said “the latest data didn’t narrow my sense of what could be prevented enough, or my conclusion.”

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“Adequate restraint” is a benchmark set by the Fed in determining where rates should go to reduce inflation. The current estimate is around 5%, although that could change when FOMC members deliver their updated view on prices and the economy at next month’s meeting.

“At the Fed we are committed to returning inflation to the 2 percent target in a timely manner. Only when inflation is low and stable does the economy in general – and the labor market in particular – work well for all Americans,” Collins. he said.

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