The Economy’s Performance and Outlook, and Implications for Policy

By Susan M. Collins

February 7, 2024

Federal Reserve Bank of Boston

Remarks to the Boston Economic Club

Full-text Speech (pdf)

Takeaways from Boston Fed President Susan M. Collins’ February 7, 2024 Remarks

The U.S. economy overall performed remarkably well in 2023. Inflation slowed notably last year, while the job market remained quite favorable. These very encouraging trends have reinforced Collins’ optimism that we are on a path to price stability with a healthy job market.
However, Collins says she will need to see more evidence that the disinflationary process will continue before beginning to carefully adjust the monetary policy stance. Recent developments in the economic data highlight that progress toward achieving the Fed’s mandated goals could be uneven, and more time is needed to discern whether some of the promising economic trends we saw in 2023 will both broaden and persist, going forward.
In Collins’ view, the threat of inflation settling persistently above the Committee’s 2 percent target has receded, and risks to the economy overall are moving into better balance. Still, a sustained, durable return to 2 percent inflation will likely require demand growing at a more moderate pace this year. Collins sees the current stance of monetary policy as consistent with achieving this outcome.
Collins says policy should reflect the commitment to restoring price stability while also aiming to preserve the more-equitable outcomes seen in this recovery. In the current environment, appropriate policy requires an assessment of the incoming data that is holistic and increasingly focused on implications for the economic outlook. While not on a preset path, she believes it will likely become appropriate to begin easing policy restraint later this year.
Collins also notes that overall, the strength of an economy has many dimensions. In this regard, the Federal Reserve is involved in a breadth of activities, all in the public interest – to support a vibrant economy that works for all: monetary policymaking, economic research, bank supervision, infrastructure and services for the financial system, and supporting collaborations that expand prospects for progress in communities.