Federal Reserve Bank of Boston President Susan Collins said more US interest-rate increases may be necessary and that she wasn’t prepared to signal the peak point.
(Bloomberg) — Federal Reserve Bank of Boston President Susan Collins said more US interest-rate increases may be necessary and that she wasn’t prepared to signal the peak point.
Central bankers from around the world are gathering in Jackson Hole, Wyoming, for the Federal Reserve Bank of Kansas City’s annual two-day gathering. Investors will parse everything out of the symposium for clues on the outlook for interest rates, which the Fed in July lifted to a range of 5.25% to 5.5%, the highest level in 22 years.
In addition to US policymakers, ECB President Christine Lagarde will deliver a speech at the symposium Friday, her first major remarks since officials raised interest rates on July 27 but left future decisions dependent on fresh data. With investors leaning toward a pause in September, they’ll listen closely for any clues that their sentiment is shared. Lagarde will speak in a Bloomberg Television interview after the speech.
(All times are NY)
Collins Says Rate Peak Near (11:34 a.m. NY)
Federal Reserve Bank of Boston President Susan Collins said the US central bank may need to raise its benchmark interest rate further and that she wasn’t prepared to signal the peak point.
“We may need additional increments, and we may be very near a place where we can hold for a substantial amount of time,” she said in an interview with Yahoo! Finance from Jackson Hole.
“I do think it’s extremely likely that we will need to hold for a substantial amount of time but exactly where the peak is, I would not signal right at this point,” she said. “We may be near but we made we may need to increase a little bit further,” said Collins, who doesn’t vote on policy this year.
ECB’s Centeno Says Downside Risks Materializing (11:27 a. m. NY)
ECB Governing Council member Mario Centeno said officials should be cautious in deciding on the next steps as risks for the economy that have previously been identified are now becoming reality.
The transmission of the ECB’s monetary tightening campaign is “up and running” and inflation’s retreat has been faster than its rise, the Bank of Portugal governor told Bloomberg Television in Jackson Hole.
“We have to be cautious this time around because downside risks that we identified in June in our forecast have materialized,” said Centeno, who also heads Portugal’s central bank. “This is an inversion of what happened throughout the pandemic recovery because usually we have been surprised on the upside.”
Harker Sees Rate Hikes on Hold (10:17 a.m. NY)
Federal Reserve Bank of Philadelphia President Patrick Harker said he sees interest rates on hold for the rest of this year, and that policymakers have likely undertaken sufficient tightening.
“Right now, I think that we’ve probably done enough because we have two things going on,” he said in an interview with CNBC. “The Fed funds rate increases — they are at a restrictive level, so let’s keep them there for a while. And also we are continuing to shrink our balance sheet that is also removing accommodation.”
“I see us staying steady throughout the rest of this year,” he said, adding that policymakers will watch how data evolve after that.
If the rate of inflation comes down quicker than expected, “we might cut sooner rather than later, but I think we have to let that play out,” he said.
Bullard Sees Strong Economy Altering Fed Plan (8:20 a.m. NY)
Former Federal Reserve Bank of St. Louis President James Bullard said a pickup in economic activity this summer could delay plans for the central bank to wrap up interest-rate increases.
“This reacceleration could put upward pressure on inflation, stem the disinflation that we’re seeing and instead delay plans for the Fed to change policy,” Bullard said Thursday during an interview with Bloomberg Television ahead of the Kansas City Fed’s symposium.
Bullard, who resigned last month to become dean of Purdue University’s business school, was an influential voice at the Fed who called for aggressive interest-rate hikes to fight the recent inflation surge.
–With assistance from Jonnelle Marte and Jana Randow.
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