Collins said the Fed’s policy patience is warranted amid still high inflation.
“It is too early to tell whether inflation is on a sustained path back to the 2% target,” Collins said in a speech in Lawrence, Massachusetts. “Just as it would be inappropriate to take too many signals from disappointing data from earlier this year, we should not overreact to a month or two of promising news,” she said.
Collins, who currently does not vote on the central bank’s rate-setting Federal Open Market Committee, also said now is not the time for the Fed to cut interest rates. move.
“An appropriate approach to monetary policy will continue to require patience and provide time for a systematic and holistic assessment of the evolving set of available data,” Collins said.
That said, Collins believes the economy is likely moving in the right direction. “I remain a realistic optimist. I am optimistic that price stability can be restored within a reasonable time with a healthy labor market, while at the same time being realistic about the risks and uncertainties about the outlook,” she said. Prime Minister Collins’ remarks are his first public comments since the Federal Reserve maintained its policy interest rate in the 5.25-5.50% range last week. Federal Reserve policymakers also cut interest rates once this year, rather than the three expected in March, due to higher-than-expected inflation at the start of the year. However, inflation data has recently begun to retreat again, opening the door to easing later in the year. Collins said the Fed has made “significant progress” in lowering inflation. She added that recent inflation data was “encouraging.” “This data suggests an economy with a better balance of supply and demand needed to restore price stability,” she added. At the same time, she warned, “this process may take more time than previously thought.”
