Fed's Collins: Patience with rising inflation is waning, interest rates may need to stay higher for longer

Odaily News: On Wednesday, Fed's Collins stated that she expects interest rates to remain steady for an extended period and believes that in some scenarios, further tightening of policy may be necessary to ensure inflation returns to the 2% target. She noted that traditional monetary policy typically "ignores" sudden supply shocks, such as rising oil prices. However, given that inflation has been above target for over five consecutive years, she believes patience in curbing price increases is currently diminishing. Collins said that the current tight monetary policy "may need to persist for some time." She stated: "Shocks have slightly increased the downside risks to economic activity while further boosting upside risks to inflation." At the same time, she also indicated that if inflation eases, the Fed could still proceed with rate cuts later this year. Collins added that, however, if conflicts persist and drive prices further upward, "I can envision a scenario where tightening policy is needed to ensure inflation returns sustainably to the 2% target within a reasonable timeframe." (Jinshi Data)