Susan Collins, the new president of the Federal Reserve Bank of Boston, said a higher unemployment rate will be needed to bring down inflation from unusually high levels but suggested any economic downturn would likely be modest.
FILE- In this Feb. 5, 2018, file photo, the seal of the Board of Governors of the United States Federal Reserve System is displayed in the ground at the Marriner S. Eccles Federal Reserve Board Building in Washington. Susan Collins, the new president of the Federal Reserve Bank of Boston, said Monday, Sept. 26, 2022, that a higher unemployment will be needed to bring down inflation from unusually high levels, but suggested any economic downturn would be modest.
“When there’s a lot of uncertainty, it can be better for policymakers to actually act more aggressively, because aggressive action and pre-emptive action can prevent the worst-case outcomes from happening,” she said. Fed officials hope their rate hikes will achieve a “soft landing” by slowing consumer and business spending enough to bring down inflation but not so much as to cause a recession.
. Hikes typically are a more modest quarter-point. Fed Chair Jerome Powell, at a news conference after the meeting, said that “the chances of a soft landing are likely to diminish” as the Fed steadily raises borrowing costs. According to a rule of thumb discovered by the economist Claudia Sahm, every time since World War II that unemployment has risen by a half-percentage point over several months, a recession has followed.is the first Black woman to serve as president of a regional Fed bank