A senior official at the Federal Reserve (the US central bank) said last Monday that persistently high inflation and renewed fighting in the Middle East in August were key reasons that led her to support raising borrowing costs last week, when she also indicated that she expected interest rates to be raised again later this year.
Susan Collins, president of the Federal Reserve Bank of Boston, said in an interview with the Associated Press that she supported the Federal Reserve's decision last Wednesday to raise the key interest rate by a quarter of a percentage point to about 3.9 percent.
She added that she also expects the Federal Reserve to keep interest rates unchanged next year.
She said: I haven't seen the progress I had hoped for on inflation. Geopolitical developments suggest we may continue to face additional energy pressures.
She added: There were reasons to believe that some scenarios in which inflation stabilizes above 2 percent were more likely to materialize, referring to the Federal Reserve's 2 percent inflation target, which it has not achieved for more than 5 years.
Collins was the second Federal Reserve official to speak on Monday about her views on interest rates, alongside Austan Goolsbee, president of the Federal Reserve Bank of Chicago, who spoke earlier in London and then participated in a roundtable with journalists.
They both spoke about inflationary pressures caused by supply-side shocks, such as the war in Iran, as well as the strength of corporate and consumer spending.
