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The Federal Reserve’s need to bring down unacceptably high inflation will cause the jobless rate to rise but a recession is not inevitable, Boston Fed President Susan Collins said in her maiden public speech on Monday.

“I do anticipate that accomplishing price stability will require slower employment growth and a somewhat higher unemployment rate,” Collins said in prepared remarks to a local chamber of commerce in Boston, even as she made clear she fully supports the U.S. central bank’s more aggressive push to quash price pressures running at 40-year highs.

Collins, who is a voting member of the Fed’s policy-setting committee this year, did nevertheless retain hope that the inflation rate, which by the central bank’s preferred measure is more than three times its 2% goal, could be tamed without a pronounced spike in layoffs, an increasingly faltering thesis among her colleagues.

US consumer inflation expectations fall in September; sentiment rises

“I do believe the goal of a more modest slowdown, while challenging, is achievable,” Collins said, citing the strength of business and household finances as well as labor shortages as the basis for hopes that a slowdown in activity could have a more modest impact on the jobless rate.

Fed policymakers raised the central bank’s benchmark overnight interest rate by three-quarters of a percentage point last week, the third straight hike of that size, and acknowledged “pain” ahead for the economy as they seek to cool demand.

The Fed’s policy rate now sits in a range of 3.00%-3.25%, but the central bank’s latest economic forecasts show borrowing costs will likely need to rise faster and further than previously thought, slowing growth to a crawl and causing unemployment to increase to a degree historically associated with recessions.

Collins added that like others on the committee she will be looking for “clear and convincing signs” inflation is falling as she parses a range of incoming economic data to guide her policy views.

Central banks raise rates again as Fed drives global inflation fight

Investors currently see a 70% probability of another 75-basis-point hike at the Fed’s next policy meeting on Nov. 1-2, according to an analysis of Fed funds futures contracts compiled by the CME Group.

Collins also noted in her speech the downside risks to her forecast. “A significant economic or geopolitical event could push our economy into a recession as policy tightens further,” she said. “Moreover, calibrating policy in these circumstances will be complicated by the fact that some effects of monetary policy work with a lag.”

Collins, who has a PhD in economics, took over as head of the Boston Fed on July 1. She was previously an academic who focused on emerging markets, exchange rates and trade, and also was a director at the Chicago Fed for nine years.

She is the first Black woman to lead one of the 12 regional Fed banks, a fact she touched on high up in her speech on Monday. “I see that as a privilege, a responsibility, and an opportunity … to expand understanding of how our economy works, and how it could work better,” Collins said.


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