At CCRI, Boston Fed chief hints at possible pause in interest rate hikes

SUSAN M. COLLINS, president of the Federal Reserve Bank of Boston, left, answers questions posed by Meghan Hughes, president of Community College of Rhode Island Thursday at the school's Warwick campus. / COURTESY COMMUNITY COLLEGE OF RHODE ISLAND

WARWICK – In her appearance at the Community College of Rhode Island Thursday, Susan M. Collins, the president of the Federal Reserve Bank of Boston, spoke about how high inflation affects all Americans, urging “We need to make sure it does not become entrenched.”

“An inflation rate that is low and predictable is needed for fostering conditions that promote a vibrant, resilient, and inclusive economy – and for maximum employment that is sustainable over time,” Collins said. “This is why it is so important to remain resolute in bringing inflation back down to the Fed’s 2% target in a reasonable amount of time.”

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Collins fielded questions on a number of hot economic topics Thursday in what was her first appearance at any educational institution in New England since her appointment to the position in July 2022. 

Collins said she specifically wanted to speak at a community college first because they provide affordable, accessible higher education to learners from all backgrounds. 

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Among the questions: Will the Fed pause on hiking interest rates? Will the U.S. ever adopt a digital currency? What can Rhode Island do about the state’s lack of affordable housing? And will the U.S. default rather than pay its bills? 

Collins said that while inflation remains too high, there are some promising signs of moderation. Collins, who is one of the 12 Federal Reserve presidents who sits on the FOMC, said she believes we may be near the point where monetary policy can pause raising interest rates. 

A pause would “provide an opportunity to more fully assess the impact of the actions taken to date and the general tightening of credit conditions on economic activity,” she said.  “However, it is important to make each policy decision based on a holistic assessment of information available at the time.”

The Federal Reserve has hiked rates at ten consecutive Federal Open Market Committee (FOMC) meetings during the past 18 months, raising the base rate from near zero to 5.25%. The FOMC determines monetary policy for the United States. 

Following the address, Collins fielded questions from CCRI President Meghan Hughes, who has served on the Board of Directors of the Federal Reserve Bank of Boston as a director since January.

The first question, provided by an audience member, asked if digital currency would ever be adapted in the U.S. and what the impact of that would be. Collins said the Boston Fed recently had partnered with the Massachusetts Institute of Technology for a digital currency feasibility study called the Project Hamilton.

“We were asked to develop a plan for a digital currency and how it could be done on the scale of the United States,” Collins said, adding that the report had been posted for the public to review. “It would be a congressional decision whether to move forward with it.” 

Asked if the debt ceiling would be raised to avoid default, Collins demurred. 

“I don’t have a crystal ball,” Collins said. “The debt ceiling is about fiscal policy. Our elected officials decide on taxing and spending decision. Not raising the debt ceiling would imply that we couldn’t pay bills that we are already committed to. The consequences would be quite severe. 

“It’s really important that we meet our obligations, and I hope that is what happens.”

Hughes asked about the “shocking lack” of affordable housing in Rhode Island and what could be done to remedy the situation. “The changes and solutions aren’t coming quickly enough,” Hughes said.

Hughes added that according to a study produced by the Boston Consulting Group, Rhode Island ranks No. 1 in the nation for the age of its housing and it is near the top of the list when it comes to the fewest number of new residential units being built. 

“The housing issues are significant and acute,” Collins said. “There’ve been housing challenges since well before the pandemic, which exacerbated it. In New England shelter prices were increasing more slowly than the national average. Now that’s flipped.” 

Collins attributed the housing crunch to the simple lack of inventory.

“Here in Rhode Island the average cost of housing is high relative to the average income, partly due to the proximity to high-priced places like Boston,” she said. “Unfortunately, I don’t think there are nice silver bullets that will fix this problem quickly. It will take partnerships with private and public interests and the government,”

Collins said that the Boston Fed is hosting another session of the “FedListens 2023” on May 31. One of the sessions will focus explicitly on housing and will be carried on live stream.

Born in Scotland to Jamaican parents and raised in New York City, Collins became the Boston Fed’s 14th president last year. As CEO, Collins oversees all of the bank’s activities, including economic research and analysis; banking supervision and financial stability efforts; community economic development activities; and a wide range of payments, technology, and finance initiatives, according to a statement

Sam Wood is a PBN staff writer. Contact him at

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