Fed gets new policymaker as inflation and recession fears rise

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Susan Collins began her job on Friday as president of the Federal Reserve Bank of Boston, becoming the first black woman to lead a regional branch of the U.S. central bank as she grapples with 40-year high inflation and rising growing fears of recession.

Collins will have her first chance to weigh in on monetary policy in just over three weeks, on July 26-27, when she joins 17 other Fed policymakers in deciding interest rates.

They are widely expected to deliver another 75 basis point rate hike, taking the Fed’s key rate to a range of 2.25% to 2.5% on the way to what they reported will likely be around 3.4% by the end of the year – up from zero at the start of the year.

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Fed Chairman Jerome Powell said the Fed’s fight against inflation – which is more than three times the Fed’s 2% target – is « unconditional ». While it could ideally be won without undermining the current labor market, he said earlier this week, the process « is very likely to involve some pain ».

Friday brought new signs of this coming pain, with an index of US factory activity slowing more than expected and an estimate of US economic growth released by the Atlanta Fed https://www.atlantafed.org /cqer/research/gdpnow has gone negative for the last quarter.

Still, most economists think U.S. employers continued to add jobs last month, albeit at a slower pace than in recent months, and the jobless rate likely held steady at 3.6%, near historic lows.

Collins, an economist and professor of public policy, most recently served as provost at the University of Michigan. She succeeds Eric Rosengren, who retired last fall amid an ethics investigation into personal trading by Fed officials during the pandemic.

In addition to helping set U.S. interest rates, Collins’ job involves overseeing Boston Fed banking supervision, community outreach, and his leadership role at the central bank in research on the technology that could be used if the Fed adopts a central bank digital currency. (Reporting by Ann Saphir Editing by Alistair Bell)

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