Written by Michael S. Darby
NEW YORK (Reuters) – Boston Federal Reserve Bank President Susan Collins said on Wednesday that the U.S. economy needs to calm down as a way to get inflation back to the central bank’s 2% target.
“For inflation to return permanently to its official target, a slowdown in economic activity is needed to better match supply and demand,” Collins said in a speech he plans to give at an event at the Massachusetts Institute of Technology. Stated.
Regarding monetary policy, he said, “Recent surprises in economic activity and inflation to the upside necessitate keeping policy at current levels until there is greater confidence that inflation is on a sustained path toward 2%.” It suggests a possibility.”
Collins’ remarks were his first since last week’s Federal Open Market Committee meeting. Officials then maintained their target range for overnight rates between 5.25% and 5.5% to continue to address inflationary pressures that have proven stronger than expected earlier this year.
Sustained price pressures have created considerable uncertainty about when central banks will be able to cut interest rates. Recent developments suggest that many Fed officials are maintaining their outlook for easing, but refraining from offering any time frame for rate cuts while they monitor data on progress in lowering inflation.
“Overall, policy is well positioned to respond to incoming information as we assess the evolving outlook and risks,” Collins said in his remarks. He also said he was “optimistic” that the Fed could raise inflation to 2% “within a reasonable period of time, provided the labor market remains healthy.”
Still, achieving 2% inflation “will take longer than previously thought,” Collins said, adding that “there is no predetermined path for policy and a wide range of information sources will be needed.” “Decisions need to be made based on a comprehensive and comprehensive evaluation.”
Collins also said in his remarks that long-term inflation expectations are consistent with the Fed’s 2% inflation target and that the recent productivity spike may not create a permanent trend. Said it was expensive. Mr Collins also said employers were likely to be able to absorb higher wage demands.
(This article has been reedited to remove photo)
(Reporting by Michael S. Darby; Editing by Andrea Ricci)