Boston Fed President Susan Collins advocates possible hike

Reserve Bank of Boston, Susan M. Collins focused on the Federal Reserve’s monetary policy in terms of if and when more rate hikes are warranted. She said that the central bank should take its time as it looks to bring inflation down, warning that further rate hikes could be warranted.

"This phase of our policy cycle requires patience, and holistic data assessment, while we stay the course.” She underscored the need for patience because in her words it allows the central bank the time needed to better separate “signal” from “noise”. She also said, "While we may be near, or even at, the peak for policy rates, further tightening could be warranted, depending on the incoming data.”

The Federal Reserve Bank President addressed that there are currently, promising developments on the inflation front however given that demand continues to outpace supply with a stronger-than-expected economy she believes that it is a little premature to take the recent improvements as concrete evidence that inflation is in fact on a sustained path back to 2%.

She also addressed the fact that expects rate hikes already implemented to “start biting more soon”.

Her message today was clear and reiterated the comments she made during the Jackson Hole economic symposium saying, "The risk of inflation staying higher for longer must now be weighed against the risk that an overly restrictive stance of monetary policy will lead to a greater slowdown in activity than is needed to restore price stability… This context calls for a patient and careful, but deliberate, approach to policy, allowing time to assess the effects of policy actions to date, and then acting appropriately."

This was one of the factors that took both the dollar and government bond yields higher which in turn pressured gold lower once again. As of 5:00 PM EDT, gold futures basis the most active December contract is fixed at $1941.80 after factoring in today’s decline of $11.00 or -0.56%. Silver futures basis the most active December contract have experienced an even stronger decline currently down $0.385 or – 1.60% taking the precious white metal to $23.49. The dollar has gained 0.46% taking the index to 104.439.

Wishing you as always good trading,