The Boston Fed President, Suan Collins, crossed the wires on Thursday as the Jackson Hole Symposium began.
She said that the recent PCE report does not change the view that policy is restrictive and will lead to gradual disinflation
Collins added that the jump in US bond yields is “still consistent with price stability,” and added that she has no comment on Bessent’s intervention. Recently, Collins added via an interview with the Wall Street Journal that a rate hike is warranted if inflation disappoints. Key highlights: RECENT PERSONAL CONSUMPTION EXPENDITURES REPORT DID NOT CHANGE MODAL OUTLOOK THAT CURRENT MONETARY POLICY IS RESTRICTIVE AND WILL LEAD TO A GRADUAL DISINFLATION PORTFOLIO MANAGEMENT FEES HAD AN OUTSIZED INFLUENCE ON HEADLINE INFLATION, WITH MARKET-BASED PRICES MORE IN LINE WITH FED’S TARGET RECENT INFLATION DATA ‘MIXED,’ WITH HEADLINE FIGURE STRONGER THAN EXPECTED BUT ‘PROMISING SIGNS’ IN THE DETAILS RECENT INCREASE IN BOND YIELDS STILL CONSISTENT WITH PRICE STABILITY, NOT A SIGN INFLATION EXPECTATIONS ARE INCREASING ABSENT NEW TARIFF AND OIL SHOCKS, THERE ARE REASONS TO THINK INFLATION WILL EASE SHE IS WATCHING BOND YIELDS, BUT HAS NO COMMENT ON BESSENT’S INTERVENTION Fed FAQs Monetary policy in the US is shaped by the Federal Reserve (Fed).
The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy.