Boston Fed President Susan Collins, who this year voted on the Federal Open Market Committee (FOMC), took office in July to speak for the first time on Monday (26), arguing that further monetary policy tightening is needed to curb high monetary policy. Stubborn inflation has also warned that unemployment could rise in the process, but a recession is not inevitable.
Collins told the Greater Boston Chamber of Commerce on Monday that bringing inflation back to target will require further monetary tightening, as recent FOMC forecasts suggest, and that it is important to see where inflation is falling. Clear and convincing signs.
Collins said achieving price stability would require slowing job growth and raising unemployment to some extent. She also made it clear that she fully supports the Federal Reserve (Fed) to take more aggressive measures to combat price pressures at 40-year highs. However, Collins did not specify how many yards the Fed would have to raise to control inflation, only that it was still too high.
Collins argues that businesses and households have strong balance sheets, which could reduce the likelihood of a sharp contraction in spending and investment as interest rates rise. She also said that because many businesses are short on staff, slower economic growth may have less of an impact on employment, so she believes the Fed is still likely to achieve a “soft landing,” where demand slows to a better balance with supply, but jobs are lost. Rates rose only modestly.
Collins added after the speech that U.S. economic growth is expected to slow sharply this year and even slower next year, without offering specific forecasts. Notably, Collins thinks inflation may be close to peaking, or it may have already peaked.
Collins, the first black woman to serve as president of the Fed’s 12-plus regional bank, took over as president of the Boston Fed on July 1. With a Ph.D. in Economics, she was a former scholar. In the past, her economic research mainly focused on new markets, exchange rates and trade. She also served as a director of the Federal Reserve Bank of Chicago for 9 years.
Before the deadline, U.S. stocks fell across the board due to the impact of central bank interest rate hikes that might trigger an economic recession. The Dow Jones Industrial Average fell nearly 270 points or nearly 1%, the Nasdaq Composite Index fell nearly 0.5%, and the S&P 500 Index fell nearly 100%. 0.9%, the Philadelphia Semiconductor Index fell nearly 1.2%.
U.S. 10-year bond yields continued to rise, now at 3.825%; gold prices fell nearly 0.9% to $1,640.80 an ounce; the dollar index continued to strengthen, rising to 114.05.
According to the CME FedWatch Tool, the U.S. federal funds rate futures market estimates that the probability of the Fed raising interest rates by 3 yards in November is 76.9%, and the probability of raising interest rates by 2 yards (50 basis points) is 23.1%.