Boston Federal Reserve President Susan Collins has warned of an increased likelihood that inflation will remain notably above the Federal Reserve’s 2% target. Explaining her support for the Fed’s quarter-point rate hike last week, she argued that a somewhat more restrictive monetary policy is needed for inflation to durably return to target. Collins participates in FOMC meetings but does not currently have a vote. Markets currently price in a 53.1% probability of another rate hike at the October FOMC meeting, according to CME Group’s FedWatch tool. Her comments align with those of ECB executive board member Philip R. Lane, who also warned that inflation would remain higher for longer due to a likely second wave of rising energy prices.
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