WARWICK, R.I. — Speaking at the Community College of Rhode Island Thursday, Federal Reserve Bank of Boston President and CEO Susan M. Collins said that “while inflation is still too high, there are some promising signs of moderation.”
“I believe we may be at, or near, the point where monetary policy can pause raising interest rates,” Collins said in remarks prepared for her chat at the Knight Campus in Warwick. “This will provide an opportunity to more fully assess the impact of the actions taken to date and the general tightening of credit conditions on economic activity.”
Collins, who doesn’t vote on the Federal Open Market Committee this year, said officials should approach policy on a meeting-by-meeting basis, and take a comprehensive assessment of information available at the time.
Collins also participated in a “fireside chat” Q&A for students and staff at CCRI with college president Meghan L. Hughes. Hughes serves on the Boston Fed’s board. It was Collins’ first talk at an educational institution since she became Boston Fed president about 10 months ago, and the choice of a community college was intentional.
“Community colleges provide affordable, accessible higher education to millions of learners from all backgrounds,” she said.
Collins said that the Fed needed to make sure high inflation doesn’t become entrenched, saying the Fed’s mandates of maximum employment and stable prices were intertwined.
“I do think it’s going to take some time, some of the declines we’ve seen so far in inflation have been a little slower than I might have anticipated but we are starting to see some positive movements,” Collins said in a question-and-answer session following her speech.
“An inflation rate that is low and predictable is needed for fostering conditions that promote a vibrant, resilient, and inclusive economy — and for maximum employment that is sustainable over time,” she said. “This is why it is so important to remain resolute in bringing inflation back down to the Fed’s 2 percent target in a reasonable amount of time.”
In the Q&A, Collins addressed whether the nation faces a recession and whether Congress would raise the debt limit.
“I do not, in my baseline, forecast a significant downturn,” she said. “I think that’s important to say. One of the risks I continue to be concerned about is the possibility of what could be almost the self-fulfilling view that conditions are really going to deteriorate.”
And on the debt limit, she said she did not have a crystal ball, but said if the nation does default, “we’d be in uncharted territory.”
“It’s really important that we meet our obligations,” she said, adding: “I very much hope that is what happens.”
This story has been updated with comments from Collins, and includes reports from Bloomberg.