Fed's Collins Optimistic on Economy, Cautious on Rate Adjustments for Inflation and Jobs
Federal Reserve officials have recently expressed optimism about the economic outlook, believing that the labor market is performing strongly, inflation is expected to fall back to the target level, and they have emphasized that they will adopt a cautious approach that relies on data to adjust interest rates in order to maintain stable economic growth and the job market.
It is understood that Federal Reserve officials are satisfied with the latest data on the US labor market. The employment report for September showed an increase of 254,000 new jobs, and the unemployment rate fell to 4.1%, which exceeded market expectations. Susan Collins, President of the Federal Reserve Bank of Boston, stated that these data have strengthened her confidence that inflation will fall back to the 2% target, and she believes that policymakers should adopt a cautious, data-dependent approach when lowering interest rates.
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Last month, the Federal Reserve cut interest rates by half a percentage point, which exceeded market expectations, showing the officials' confidence in the decline of the inflation rate. Jerome Powell, Chairman of the Federal Reserve, stated that the rate cut is aimed at boosting the economy.
Nevertheless, Collins also warned that the impact of restrictive monetary policy is emerging, especially in economic sectors that are sensitive to interest rates. She pointed out that although the labor market is cooling down and economic growth is slowing, the US economy is now more susceptible to shocks.
Collins said that while she is more confident in the trajectory of deflation, she is also aware that the risks of economic slowdown are increasing, which could exceed the extent needed to restore price stability. Therefore, she and other Federal Reserve officials will continue to closely monitor economic data to ensure that adjustments to monetary policy can support economic growth while effectively controlling inflation.
At the same time, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, emphasized that the Federal Reserve needs to balance the risks of inflation and the job market when considering the pace of future interest rate cuts. He mentioned that although the risk of inflation has decreased, the threat to the labor market has increased. Bostic also mentioned the impact of climate change on the economy, especially the frequent occurrence of hurricanes and the rise in insurance costs.
John Williams, President of the Federal Reserve Bank of New York, said in an interview that after the significant rate cut in September, it would be appropriate for the central bank to "gradually" cut interest rates again. Adriana Ciobanu, a member of the Federal Reserve Board, also expressed support for the recent rate cut measures and said she would support further rate cuts if inflation continues to ease.
Ciobanu emphasized that although the Federal Reserve wants to avoid excessive weakness in the labor market, the current labor market has already shown signs of cooling down. She also mentioned that the Federal Reserve will not make decisions based solely on a single indicator but will pay attention to trends.
Overall, Federal Reserve officials are cautious about future monetary policy. They focus on the downward trend of inflation rates and also closely monitor changes in the labor market. They believe that by gradually adjusting interest rates, it is possible to achieve the goal of returning the inflation rate to 2% while maintaining stable economic growth.
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