Susan M. Collins, president of the Federal Reserve Bank of Boston, said she was leaning toward a 25 bps interest rate hike at the next FOMC meeting, a slowing down in the pace of rate hike compared to the large increases adopted by the central bank last year in its fight against inflation.
I think 25 or 50 would be reasonable, but I lean to 25 at this stage, but it is very data-dependent, Collins told The New York Times on Wednesday. As we get close to where we're going to hold, it gives more time to assess the incoming data before we make a decision. She said that smaller changes give us more flexibility.
She will take part in deliberations as a result of the report, and it is noteworthy that she does not have a formal vote on rate changes this year.
On Wednesday, Wall Street indices closed in the green due to optimism over a decline in inflation ahead of the release of consumer price index data on Thursday. The SPDR S&P 500 ETF Trust SPY closed 1.26% higher, while the QQQ Trust Series 1 QQQ gained 1.73%.
The Boston Fed President said she is in favor of raising interest rates to just above 5% this year, possibly in three quarter-point moves in February, March and May.
She said if we went to faster, more judicious rate increases, it could take three rate increases to get there - and then hold through the end of 2023, that still seems like a reasonable outlook to me.
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