Boston Federal Reserve President Susan Collins expressed confidence Thursday that the U.S. central bank can reduce inflation without triggering a recession, and signaled her support for starting interest rate cuts next month.
“I think there is a clear path to achieve our goals without an unnecessary slowdown and with a labor market that remains healthy,” Collins told Reuters in an interview in Jackson Hole, Wyoming, where global central bank officials are meeting for the Kansas City Fed’s annual economic symposium.
“The importance of preserving a healthy labor market while continuing to reduce inflation is one reason why it seems timely to begin easing.”
The Fed is expected to begin cutting its benchmark rate at its September 17-18 monetary policy meeting, marking a major turning point in its battle against inflation.
Collins declined to comment on whether the Fed might begin its easing cycle with a 50 percentage point interest rate cut rather than the more common 25 percentage point move, but his emphasis on market health and call for a “gradual and methodical” approach to monetary policy adjustment suggests it is biased toward lower borrowing costs.
“It’s important to talk about the range of data that we’re seeing that shows a healthy labor market overall,” Collins said, noting that job openings have declined, the decline in monthly job gains has been driven primarily by a hiring slowdown rather than a hiring slowdown, a surge in mass layoffs, and the unemployment rate, at 4.3%, is still low.
“The orderly rebalancing we have seen has been encouraging and very helpful overall, and I think a gradual and methodical approach to reviewing our monetary policy stance over time will continue to be appropriate,” he said. “We are well positioned and … it is important to preserve this healthy labor market as we continue to reduce inflation.”
Source: Terra
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