Fed's Collins says gradual rate hikes best to manage economic risks
A number of Fed officials have said a more measured pace of rate increases allows the economy time to adjust to the rise in borrowing costs.
Federal Reserve Bank of Boston President Susan Collins has expressed her support for gradual interest rate increases to manage economic risks. In a recent interview, Collins stated that a steady and measured pace of rate hikes allows the economy sufficient time to adjust to the rise in borrowing costs. She acknowledged the challenges of managing economic uncertainties but indicated that, for now, a gradual approach appears to be the most appropriate course of action.
Collins also noted that while there are risks on both sides of the economy, with inflation high and unemployment stable, there are ongoing risks of further shocks to the economy. She also expressed cautious optimism about the potential for a higher path of policy rates over the next year, given recent price data and a stronger labor market.
Despite some Fed officials suggesting a more aggressive pace of rate rises, Collins believes that such a move may not be necessary at this time. The Federal Reserve last raised rates in September, and it is widely expected to lift its current target range by a quarter percentage point at the December 8-9 monetary policy meeting, with another increase in January.
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