On Thursday, Susan Collins, the CEO of the Federal Reserve Bank of Boston, stated her anticipation for interest rates to decrease by three-quarters of a percentage point within the year. According to her, these cuts would commence once data indicates inflation is nearing 2%, particularly amidst a robust labor market.
In an interview with Sirius XM, Collins emphasized her expectation, stating, “I do expect that before the end of the year, it will be appropriate for us to carefully begin easing rates.” She underscored her optimism regarding inflation's progression while acknowledging the genuine risks associated with a potential slowdown amidst strong economic growth.
"We are going to need growth to slow, and I am looking for an orderly slowdown," she added.
The December Federal Reserve forecasts demonstrate that the majority of central bank members anticipate the current policy rate to remain within the range of 5.25% to 5.5%. By the end of 2024, there are plans to reduce this range to 4.5%-4.75% or below. The average forecast suggests three rate cuts of 25 basis points.
"My baseline remains similar," Collins noted, underscoring that the Fed's policy isn't set in stone and necessitates adjustments based on the released data.
Concerning the timing of prospective rate cuts, she commented, "I will need more, additional evidence" to confirm the trend toward the Fed's 2% inflation target, though delaying cuts until the 12-month rate hits that goal "would be waiting too long."
The latest available data for inflation at the Fed's target, measured by the year-over-year change in the price index for personal consumption expenditures, stood at 2.6% in December. This represents less than half the rate recorded in January 2023.
Login in Personal Account
105
