Boston Fed President Susan Collins said persistent inflation and energy-price pressure drove her support for last week's quarter-point rate increase, which took the policy rate to about 3.9 per cent. Collins pencilled in another increase this year and said she expected no rate change next year; she does not vote this year.
Boston Fed President Susan Collins cited persistent inflation and pressure from energy prices when explaining her support for last week's quarter-point rate increase. The decision lifted the policy rate to about 3.9 per cent. Associated Press and FXStreet report that Collins viewed renewed Middle East hostilities as a factor that could create additional price pressure through energy.[1], [2]
Collins said she had not seen the inflation progress she hoped for and saw a greater chance that price growth could remain persistent. She also said the employment outlook had improved. Persistent inflation and a stronger employment outlook appeared in her account as two distinct considerations behind last week's rate decision. Energy prices also featured as an additional pressure in the inflation outlook.[1], [2]
Collins said she had pencilled in one more rate increase this year and expected no change next year. That is one policymaker's preferred path, not a Federal Open Market Committee decision. Collins does not vote on the Committee this year. Her comments still show the focus of the internal debate: whether energy pressure will interrupt the slowing of inflation is being watched closely.[1], [2]
