(Corrects day of week in last paragraph) <\/p>\n
By Howard Schneider <\/p>\n
WASHINGTON, Aug 25 (Reuters) – The U.S. Federal Reserve will need to raise interest rates soon unless coming data \u200cshow a continued decline in inflation that remains too high and which has \u200cbecome a “pervasive” concern for businesses and households, Boston Fed President Susan Collins said on Tuesday. <\/p>\n
Collins said in comments posted \u200bto the Boston Fed website that the current Fed policy rate, under her base case outlook, will continue to push down prices and help with a “gradual disinflation” aided also by the recent rise in longer-term bond yields and other factors. <\/p>\n
But “should evidence of sustained inflation progress not materialize, \u200cI believe it will be \u2060appropriate to tighten policy soon to ensure we deliver price stability in a reasonable time frame. … Concerns about high prices are pervasive in my \u2060conversations with stakeholders across New England,” Collins wrote. <\/p>\n
Economists polled by Reuters expect that new inflation data on Wednesday will show that the Personal Consumption Expenditures price index, excluding food and energy, increased at \u200ba \u200b3.3% annual rate in July, unchanged from the \u200bmonth before and well above the \u200cFed’s 2% target. Core PCE, considered a guide to future headline inflation, has risen steadily since last year, with Fed officials citing the Trump administration’s import tariffs, higher oil prices due to the war with Iran, and now massive investments in artificial intelligence as reasons for the increase. <\/p>\n
The Fed’s policy rate, currently in the 3.5% to 3.75% range, has been on \u200chold since December as officials waited for inflation to \u200bease. <\/p>\n
Collins said she still thinks that may happen, but, \u200bwith inflation above target for more \u200bthan five years now, she also said the Fed cannot wait forever, and \u200cis concerned that further time missing the \u200binflation goal could shift \u200bconsumer expectations in a way that makes the inflation goal harder to achieve. <\/p>\n
Fed Chairman Kevin Warsh speaks on Friday in a much-anticipated keynote address to the central bank’s \u200bannual research symposium in \u200cJackson Hole, Wyoming, remarks that come amid division on the Fed about the need \u200bfor rate hikes, and a rise in U.S. Treasury yields. <\/p>\n
(Reporting by Howard \u200bSchneider; Editing by Chizu Nomiyama and Mark Porter) <\/p>\n","protected":false},"excerpt":{"rendered":"(Corrects day of week in last paragraph) By Howard Schneider WASHINGTON, Aug 25 (Reuters) – The U.S. Federal…\n","protected":false},"author":2,"featured_media":826494,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[350154,28,101,9403,6301,23266,12800,56919],"class_list":["post-826493","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-boston-fed","tag-business","tag-economy","tag-headline-inflation","tag-inflation-data","tag-inflation-goal","tag-susan-collins","tag-u-s-federal-reserve"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/826493","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=826493"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/826493\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/826494"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=826493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=826493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=826493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}