Fed Focuses on Curbing Inflation Rather Than Lowering Rates, Even as Economy Shows Strength
- Boston Fed's Susan Collins opposes December rate cut, citing persistent inflation and a strong economy, emphasizing "restrictive policy is very appropriate right now." - FOMC meeting minutes reveal divided policymakers: Stephen Miran advocated larger cuts, while Kansas City's Jeff Schmid opposed any reduction, marking first 2019-style dissent. - Government shutdown delayed November jobs data until December 16, heightening uncertainty as officials struggle to assess economic conditions ahead of the Decemb
Susan Collins, President of the Federal Reserve Bank of Boston, has expressed doubts about the possibility of a rate reduction at the Fed’s December meeting, pointing to persistent inflation and a robust economy as key reasons. In a recent interview with CNBC, Collins stated that “maintaining a restrictive stance is the right approach at this time” due to current inflation trends, and she urged caution when considering further reductions in borrowing costs
The Fed’s rate cut in October, its second consecutive reduction, was intended to support a weakening job market while continuing efforts to bring down inflation, which has stayed above the 2% goal for over four years
The Fed’s policy decisions have also been complicated by the government shutdown, which postponed the release of the November jobs report until December 16—just ahead of the December meeting
Market responses to this uncertainty have varied. Analysts at Jefferies estimate that deregulation in the U.S. banking sector could free up $2.6 trillion in capital for major banks, potentially increasing lending and profits
Looking forward, the Fed’s meeting on December 9-10 is expected to draw significant attention. While some, such as Williams, have indicated a willingness to consider easing, most policymakers seem inclined to keep rates steady until there is clearer evidence that inflation is slowing
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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