Boston Federal Reserve Bank President Susan Collins recently spoke about the personal consumption expenditure (PCE) price index report for February, noting that while there has been some positive news, inflation remains too high. Speaking to Bloomberg Television, Collins observed that although February data was a “bit lower,” it needed to be considered alongside significantly elevated readings from the previous two months. As a result, the 3-month average for PCE inflation remains roughly the same as the 12-month average.
Collins believes that the Fed needs to continue working on tackling inflation, and more progress needs to be made before a sustained downward trend can be seen. Despite this, she did not express a clear stance on what the Fed should do at its next meeting, indicating that she would wait to see more data before making any definitive recommendations.
Collins also spoke at a previous event, stating that her views aligned with the median forecast of her fellow Fed officials. Specifically, she believes that there will be one more rate hike in 2022 before no rate cuts occur until 2024.
The PCE price index is often used by economists and policymakers as a measure of inflation. It is a measure of the average change over time in the prices paid by households for goods and services, excluding certain items such as investments and government assistance programs. Because it represents the prices of goods and services consumed by households, it can help policymakers better understand how changes in the economy impact the average consumer’s financial situation.
Inflation has been a hot topic in recent months as the economy continues to recover from the COVID-19 pandemic. As the pandemic caused many businesses to shut down or reduce their operations, the supply of goods and services became more limited, leading to price increases for some essential items. Additionally, as demand picked up, some industries faced shortages, which led to further price increases. Many economists and policymakers have been closely watching inflation to determine if it remains a temporary side effect of the pandemic or if it is becoming a more sustained problem.
Collins’ comments indicate that while there has been some positive news in recent months, the Fed should not be complacent and should continue to monitor inflation closely. By waiting for more data, Collins hopes to gain a more accurate understanding of whether inflation is trending in the right direction or whether further intervention is needed.
Currently, the Fed has been taking several measures to control inflation, including keeping interest rates near record lows and tapering its bond-buying program. As the economy continues to recover, the Fed will need to find a balance between supporting growth and controlling inflation. Collins’ comments suggest that she believes that the Fed must continue to be vigilant to ensure that inflation does not become a sustained problem that harms the long-term prospects of the economy.
In summary, Susan Collins spoke about the PCE price index report for February, noting that while there has been some positive news, inflation remains too high. She believes that the Fed needs to continue working on tackling inflation, and more progress needs to be made before a sustained downward trend can be seen. By waiting for more data, Collins hopes to gain a more accurate understanding of whether inflation is trending in the right direction or whether further intervention is needed. Her comments suggest that she believes that the Fed must continue to be vigilant to ensure that inflation does not become a sustained problem that harms the long-term prospects of the economy.
