Boston Fed president says they 'may have more to do' to beat down inflation

Boston Fed president says they 'may have more to do' to beat down inflation
Susan Collins said she is surprised the economy has remained so resilient.
AUG 25, 2023

The U.S. economy is holding up well against difficult economic conditions, a little too well for those with inflation as a primary focus.

Boston Fed president Susan Collins says that the resilience of the economy has surprised her and believes there may be “more to do” to bring inflation down to the central bank’s 2% target in “a reasonable time”, suggesting more interest rate hikes could be incoming.

Not that Collins is a dead cert to vote for a rate rise at the Fed’s meeting in September. She told the FT that policymakers need to have patience and consider more data before each decision.

With mortgage rates now their highest in a decade or more and Treasury yields and real interest rates at levels we have not been used to for some time, Collins is well aware that further tightening may be painful, but she also acknowledges the need to tame inflation.

For now, she suggests that rates may be at a point where they can be held “for some time” but is not ruling out further incremental hikes “sometime down the road.”

Asked if she believes that the era of ultra-low interest rates is over, she said it is a possibility but it's still “too early to say.”

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