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MNI: Fed's Collins Says Modest Economic Slowdown Achievable

(MNI) WASHINGTON

New Boston Fed chief says price stability requires higher unemployment rate.

Boston Fed President Susan Collins in her first public speech Monday said the central bank can achieve its target of 2% inflation without causing severe damage to the U.S. economy but it will require the unemployment rate moving higher.

"As monetary policy moves to a restrictive stance to transition the economy to more sustainable labor market conditions, there is apprehension about the possibility of a significant downturn. I do believe the goal of a more modest slowdown, while challenging, is achievable," she said, stressing that price stability sets the foundation for sustainable maximum employment.

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Boston Fed President Susan Collins in her first public speech Monday said the central bank can achieve its target of 2% inflation without causing severe damage to the U.S. economy but it will require the unemployment rate moving higher.

"As monetary policy moves to a restrictive stance to transition the economy to more sustainable labor market conditions, there is apprehension about the possibility of a significant downturn. I do believe the goal of a more modest slowdown, while challenging, is achievable," she said, stressing that price stability sets the foundation for sustainable maximum employment.

Keep reading...Show less