Ahead of December rate decision…Boston Fed president with voting rights says "holding steady is appropriate"

Growing divergence of views within the Fed

Susan Collins, president of the Federal Reserve Bank of Boston, who holds a vote in the December U.S. central bank (Fed) rate decision, expressed a negative view on further rate cuts on the 12th (local time).

At a regional bank conference in Boston that day, President Collins said, "Based on my baseline outlook, it seems appropriate to keep the policy rate at its current level for the time being to balance the risks between inflation and employment in such a highly uncertain environment."

She added that "the current stance of monetary policy remains somewhat restrictive," while diagnosing that "broad financial conditions are acting as a tailwind, not a headwind, for economic growth."

President Collins voted in favor of a 0.25%percentage point cut to the policy rate at the October Federal Open Market Committee (FOMC) meeting, but this is interpreted as opposing an additional cut at the December meeting. President Collins will continue to hold a vote through the December FOMC meeting.

On the other hand, Steven Myron, a Fed director known as 'Trump's economic adviser,' maintained the view that the Fed should speed up rate cuts, arguing for a 0.50%percentage point cut at the October FOMC meeting.

Fed Chair Jerome Powell repeatedly emphasized at the post-November FOMC press conference that "an additional cut in December is not a foregone conclusion," suggesting strong differences of opinion among FOMC members.

The Wall Street Journal (WSJ) analyzed that, as differences of opinion among Fed officials have grown unprecedentedly during Chair Powell's tenure, the path of monetary policy has become unclear ahead of the December FOMC. Financial markets likewise have not presented a clear outlook on what the Fed will decide at the December meeting.

Park Su-rim, Hankyung.com reporter paksr365@hankyung.com