Susan M. Collins quoted in Detroit Free Press about Federal Reserve unpredictability
Susan M. Collins, Joan and Sanford Weill Dean of Public Policy at the Ford School, was one of several economists who provided insight into possible actions the Federal Reserve could take in the coming year following its decision to not raise interest rates last week.
In a Detroit Free Press column published last Thursday, “Waiting game at Fed over for now,” Collins explained that the Fed’s actions in the short term will likely be difficult to predict, even for experts. The unpredictability, as Collins explained, is largely due to the cautious, data-driven approach the Fed is expected to take in the face of several key economic uncertainties, namely, slower growth in China, U.S. stock market volatility, and the weakness in inflation.
"You can't be both predictable and data driven because each meeting the Fed is going to look at the most recent data," Collins is quoted as saying.
Collins also said in the piece that “the downside risks for the economy would be far greater if the Fed locked in its views right now on how and when rates would go up in the next year or so.” Collins did forecast, however, that it’s very likely interest rates will be somewhat higher next year. The other economists cited in the column shared similar sentiments.
Susan M. Collins is the Joan and Sanford Weill Dean of Public Policy and a professor of public policy and economics at the University of Michigan’s Gerald R. Ford School of Public Policy. She is a nonresident senior fellow at the Brookings Institution and a member of the Board of Directors of the Detroit Branch of the Federal Reserve Bank of Chicago.