Boston Fed’s Collins: Next Phase Interest Rate Hikes Need Shift Of Focus

Next Phase Of Fed Interest Rate Hikes: Boston Fed President Susan Collins said there is still more work in terms of tightening to do to curtail inflation. She expressed optimism about lowering inflation without a significant economic slowdown. This comes at the backdrop of Fed chair Jerome Powell’s hints at slowing rate hike as soon as in the December FOMC meeting. After yet another rate hike announcement by FOMC in November meeting, Bitcoin (BTC) hardly showed any deviance.

Interest Rate Rise So Far ‘Appropriate’

Collins said the aggressive pace of interest rate increases so far have been appropriate, considering the low rate hikes before March. However, the Fed is slowly showing signs of a potential slowing down of rate rise in near future. Powell said that it will become appropriate to slow pace of rate hikes at some point down the line. It remains to be seen if the slow down could be seen within the next two meetings. In this context, Boston Fed’s Collins said there needs to be a shift of focus:

“Now that rates are in restrictive territory, the next phase of tightening should shift from a focus on pace to a focus on levels – determining the level needed to be sufficiently restrictive.”

The Boston Federal Reserve Bank president said she expects inflation lowering to require additional increases in the federal funds rate. This can be followed by a period of holding rates at a sufficiently restrictive level for some time.

December 2022 FOMC Meeting

Collins also said the size of future increase in interest rate needs to be assessed accordingly. The next Federal Open Market Committee (FOMC) meeting for December month is tentatively scheduled for December 13 and 14, 2022. Apart from the traditional markets, the cryptocurrency ecosystem will be looking at the potential 50 bps hike following the December meeting.

As of writing, Bitcoin price stands at $20,768, up 2.53% in the last 24 hours, according to price tracking platform CoinMarketCap.

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