On March 31, Collins of the Federal Reserve stated that the US banking system is sound, and the Federal Reserve needs to raise interest rates further to curb inflation.
“Inflation remains too high and recent indicators reinforce my view that we have more work to do to keep inflation consistent with our 2 percent objective,” Collins said on Thursday.
Collins said recent stress in the banking sector had added to uncertainty about the economic outlook, but stricter lending standards could reduce the need for further rate hikes later.
She doesn’t expect the Fed to cut rates this year, but traders disagree, with some predicting a banking crisis that will push the U.S. closer to recession.
Collins said that as the situation develops, officials will monitor the banking system closely and take further action if necessary. “The Federal Reserve continues to closely monitor financial conditions and is prepared to use all available tools to keep the banking system safe and healthy.”