The Federal Reserve's Collins: The ebbing tide of global economic integration could drive up inflation

The fading tide of global economic integration could complicate the Fed's work and push up price pressures, the Federal Reserve said on Friday. Ms Collins noted that the shift to "economic fragmentation" could "bring about a transition period of inflationary pressure". Such an environment could lead to "less financial integration", she added, "raising domestic borrowing costs and affecting financial conditions more broadly". "A more volatile and fragmented global environment could lead to increased business cycle and inflation volatility", she said. Such an environment, she added, "could complicate the Fed's efforts to maintain price stability and maximum employment, especially if the supply-side component of economic shocks is greater in this new environment". Rising global risks and fragmentation "tend to dampen short-term economic activity while reducing long-term growth and have never been a significant, transformative and intertwined force shaping the economic landscape in the years ahead", Mr. Collins added.