Collins backs rate hike and tighter policy to curb inflation

Boston Federal Reserve President Susan Collins said she supported the Federal Reserve’s quarter-point interest rate increase last week and believes a somewhat more restrictive policy stance is appropriate to bring inflation sustainably back to the central bank’s 2% target. She also said the likelihood of future scenarios in which inflation remains notably above target has increased. The rate increase, announced Wednesday, September 16, brought the benchmark rate to about 3.9%, according to the reports. Collins said she backed the move because progress in reducing inflation had been slower than she wanted. She described the inflation outlook as carrying greater upside risks, while saying labor market conditions appeared somewhat stronger overall. In remarks reported Monday and a LinkedIn post published Tuesday, Collins argued that a stronger labor market gives monetary policy room to focus on restoring price stability. Inflation has remained above the Fed’s 2% target for more than five years, the reports said. Collins’ comments describe her assessment of the risks and the appropriate policy response; they do not establish what the Fed will decide at its next meetings.