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The president of the Boston Federal Reserve said signs of waning inflation suggest the central bank may be “at, or near, the point” where it can stop raising interest rates.
“While inflation is still way too high, there are some promising signs of moderation,” said Susan Collins, president of the Boston Fed, at an event at the Community College of Rhode Island.
Yet Collins also said she would base her judgment on upcoming reports on inflation, employment and economic growth before the Fed’s next big meeting on June 13-14.
The Fed raised a key short-term interest rate in May for the 10th meeting in a row — to a range of 5% to 5.25% — as part of an effort to tame high inflation.
At the time, Chairman Jerome Powell indicated the central bank might not take any action in June, especially in light of recent turmoil in the banking system.
The Fed wants to gauge the effects of previous rate hikes on the economy and see if the stress on the financial system spreads. A weakened financial system could also do grave damage to the economy, they point out.
Yet recent remarks by Collins and scores of other senior Fed officials show little consensus now on what to do in June. Several say interest rates need to go higher this year while most others have taken a wait-and-see approach.
The central bank appear undecided on whether to “hike, skip or pause,” in the words of Fed Gov. Christopher Waller.
Collins is not a voting member this year of the Fed panel that sets U.S. interest rates. She has previously indicated the current level of rates should be sufficient to get inflation under control.
