Fed's Collins says gradual rate hikes best to manage economic risks
TLT•Boston Fed President Susan Collins said steady, gradual rate increases best manage economic risks, though recent inflation and labor data may put the peak policy rate higher than she expected. The Fed's 3.75%-4% target range is widely expected to rise by a quarter point in December and again in January.
1. Gradual increases preferred
Susan Collins said she supports a steady, gradual path of modest interest rate increases, while remaining open-minded. She cited two-sided risks, including high and broadening inflation, a stable job market with potential to accelerate, and the possibility that higher medium- and longer-term rates could weigh on demand more than she expects.
2. Rate outlook shifts higher
Collins said recent price data and a stronger labor market make her think policy rates over the next year may end up somewhat higher than she expected a couple of months ago. She said gradual increases do not necessarily imply a particular cadence, and that the data argue against a more aggressive pace for now. The Fed last raised rates in September; another quarter-point increase is widely expected at its December 8-9 meeting, followed by one in January.
