(Bloomberg) -- Federal Reserve Bank of Boston President Susan Collins said that there’s “more work to do” to bring inflation down and that it will be important to monitor data given the uncertainty over how much the recent banking turmoil will affect credit and the economy.

“We still do have more work to do and more to see to know that inflation is really on a sustained downward path,” Collins said in an interview Friday on Bloomberg Television with Michael McKee. While there is some slower economic data, “at the same time, early days yet in terms of assessing whether we really have gone as far as we need to go.”

Collins said the US economy is “likely to see at least some” credit tightening as a result of banking issues, something she factored in when submitting her economic projections at last week’s meeting. Prior to the collapse of Silicon Valley Bank and Signature Bank, the Fed official said she was poised to raise her outlook for how high rates would need to go to tame prices.

Collins spoke minutes after the latest reading on US inflation, with the Fed’s preferred core gauge — which excludes volatile food and energy costs — rising 0.3% in February from the previous month, slightly less than economists had forecast. The overall index was up 5% from a year earlier, still more than double the Fed’s 2% target.

She said that the inflation figures came in roughly as expected. Collins also reiterated her view that there is still a possible pathway to bringing down inflation without a “significant downturn.”

Fed officials raised interest rates by a quarter percentage point last week, continuing their year-long fight to cool price pressures despite recent turmoil in the banking system. 

The move lifted their policy benchmark to a 4.75% to 5% target range, from near zero a year before. Forecasts released at the same time show the 18 officials expect rates to reach 5.1% by year-end, according to their median projection, implying one more 25 basis-point hike. 

Good Measure

Collins, who doesn’t vote on monetary policy decisions this year, said the median projections submitted by Fed officials in March were a good measure of what she expects for interest rates and the economy. She said the economic data released over the past week has not been enough to “materially” change the way she is thinking about what the Fed needs to do.

The Fed official said it will be important for the central bank to conduct a thorough review of its supervisory practices after the second-largest bank failure in US history. Fed Vice Chair of Supervision Michael Barr is leading an internal review that’s set to be released by May.

The review needs to “be thorough, unfettered, and that we not prejudge what the lessons and findings for that report are going to be,” she said. “We commit with a bit of a sense of humility that we will take those findings really seriously and act on them to continue to strengthen what I see as already a sound and resilient banking system.” 

--With assistance from Robert Jameson.

(Updates with comment from Collins in first paragraph.)

©2023 Bloomberg L.P.