Fed Officials: Rate Hike Needed to Combat Stubborn Inflation

Federal Reserve officials Susan Collins and Austan Goolsbee offered insight into their support for last week's interest rate hike. The Fed raised its benchmark interest rate by a quarter-point to about 3.9%, marking the first increase in three years.

Collins, president of the Federal Reserve Bank of Boston, said she agreed with the decision due to stubbornly high inflation and geopolitical developments that could continue to push up energy costs. She noted that data showing improved hiring also played a role in her decision.

Goolsbee, president of the Chicago Fed, echoed Collins' concerns about inflation, citing persistent supply shocks, including higher oil prices from the Iran war and tariffs. He suggested that the central bank may have to cause economic pain through higher unemployment to combat stubbornly high inflation.