MNI BRIEF: Fed's Collins - Labor Supply Offsets Need For Hike
Boston Fed President Susan Collins said Friday faster growth due to an increased labor supply may not lead to inflation that requires tighter monetary policy.
"A goal of current monetary policy is, of course, to restore a better balance in the labor market, with higher interest rates working to slow labor demand in this realignment process," she said in prepared remarks at a Boston Fed
on full employment. "If labor supply expands to meet demand in tight labor markets, then higher levels of economic activity in such times may not generate additional price pressures requiring tighter monetary policy."
Collins noted that recently part of the move toward a better labor market balance has come through an increase in labor supply. "The labor force participation rate for prime-aged workers (ages 25-54) is higher today than it was just before the pandemic -- a development that few expected even a year ago," she said. (See: MNI INTERVIEW: Fed Done Hiking, Eyes Long Hold-Ex-IMF Official )