World, Economy

Fed official expects interest rates staying higher for longer

Susan Collins says inflation remains too high despite encouraging inflation readings recently

Ovunc Kutlu  | 22.09.2023 - Update : 22.09.2023
Fed official expects interest rates staying higher for longer


The president of the Federal Reserve Bank of Boston said Friday she expects interest rates staying higher for longer, and further monetary tightening is "certainly not off the table."

"While recent inflation readings have been encouraging, inflation remains too high," Susan Collins said in her remarks at the Annual Convention of the Maine Bankers Association. "Some important components of inflation have yet to show sustained improvement."

To fight inflation that climbed to a four-decade record level last summer, the Fed made a total of 11 interest rate increases since March 2022

Annual consumer inflation in the US soared to 9.1% last June, while the rate hikes pushed it down to 4% in May and further down to 3% in June this year.

The rate was 3.2% in July and climbed to 3.7% in August.

But the central bank on Wednesday skipped an interest rate hike for the second time this year.

"Although still elevated, inflation is down from its earlier peak. However, most of the moderation in core inflation has come from a decline in goods inflation. Shelter inflation has also moderated recently, and will likely ease further," Collins said.

"However, inflation in core services excluding shelter, over half of the Fed's preferred inflation measure, has yet to show improvement consistent with price stability," she added.

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