The Fed: Fed’s Collins backs forecast of one more rate hike and no cuts this year

by | Mar 30, 2023 | Stock Market

While the stress in the banking sector made it hard to know what was the appropriate interest-rate policy, another one-quarter-percent rate hike seemed reasonable, Boston Fed President Susan Collins said Thursday. “I currently anticipate some modest additional policy tightening and then holding through the end of this year,” Collins said, in a speech to a National Association for Business Economics conference.

Collins’ position matches the median forecast of Fed officials in their latest economic projections released last week. Collins said this forecast on one rate hike and then steady rates until 2024 “reasonably balances the risk of monetary policy not being restrictive enough to bring inflation down and the risk that activity slows by more than needed to address elevated price pressures.” The Boston Fed president said it was premature to say what would be needed at the May meeting because there will be more economic data before policymakers meet on May 2-3. Collins called herself “a realistic optimist” saying that she still thinks there is a path to bring inflation down without a significant recession. Inflation remains too high, the Boston Fed president said. Recent data show signs of more strength in the economy than many anticipated. This strength might reflect the fact that interest-rate …

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