Fed officials signal further rate increases as labor market remains tight

The Federal Reserve will not be soft on borrowers. Boston Fed president Susan Collins publicly backed the recent policy rate increase and warned that the central bank will have to tighten monetary policy further to return inflation to the cherished 2% target.

Collins set out her macroeconomic warnings on LinkedIn. She said inflation has stubbornly refused to fall after five years of continuous price increases, so the federal funds rate must become even more restrictive. Last week, the Fed unanimously raised the rate by 25 basis points, and most officials expect at least one more hike before year‑end.

Collins cited an unusually resilient labor market as the key argument for financial toughness. As long as unemployment remains low, the central bank can, without immediate social catastrophe, squeeze inflation with expensive money. Fed Chair Kevin Warsh echoed the sentiment, saying recent rate increases have finally removed excess looseness from the US economy.