Fed’s Collins Says Rate Hike Will Help Return Inflation to Goal

(Bloomberg) -- Federal Reserve Bank of Boston President Susan Collins said she supported last week's decision to raise interest rates, which she said would help bring inflation back to the central bank's 2% target.

"A somewhat more restrictive federal funds rate will help ensure that inflation durably returns to target," Collins wrote in a LinkedIn post on Tuesday. "With the labor market on a better footing, monetary policy can focus on a timely return to price stability, especially after five and a half years of too high inflation."

Collins, who doesn't vote on monetary policy this year, said she saw an "increased likelihood" of scenarios in which inflation remains "notably above 2%."

Fed officials voted unanimously last week to raise their benchmark interest rate by a quarter percentage point. In their updated economic projections, policymakers penciled in one more quarter-point hike this year, according to the median forecast. Eight officials forecast yet another increase in 2027.

Chairman Kevin Warsh, who again abstained from submitting rate projections, said last week's decision removes a "dose of accommodation" from the economy.