Fed President Collins expects steady rates for some time
Boston Fed President Susan Collins says interest rates should remain steady as inflation risks persist. She expects policy easing might begin later this year.
Federal Reserve Bank of Boston President Susan Collins stated on Friday that she sees no immediate requirement to adjust interest rates, suggesting that the current policy should hold steady for some time. Speaking in Springfield, Massachusetts, Collins noted that the timeline for easing monetary policy remains contingent on inflation retreating further toward the 2% target. > Based on my outlook I see a patient, deliberate approach as appropriate. She explained that her baseline forecast includes an uncertain inflation picture with persistent upside risks, which justifies maintaining the federal funds target rate range at its current level of 3.5% to 3.75%. > I do not see an urgency for additional policy adjustments. This stance is supported by recent evidence of a relatively stable labor market in the United States, although Collins indicated she is looking for clear evidence of cooling prices before considering a rate cut, a development she suggested might not occur until the latter half of the year. Economic uncertainty remains high, exacerbated by geopolitical developments such as the hostilities in the Middle East. The Federal Reserve is currently navigating challenges posed by surging energy prices linked to the conflict involving Israel and Iran. Rising gasoline costs could potentially unanchor inflation expectations, complicating any future efforts to lower rates. Despite these pressures, Collins described her baseline outlook as fairly benign, expecting solid growth and a resumption of disinflation as tariff effects diminish. Regarding the job market, she noted that while hiring could improve from last year's pace, job gains are likely to remain modest, particularly as artificial intelligence begins to impact employment trends. Her comments arrived the same day as government data revealed unexpected job losses in February, a signal of potential weakness that the central bank must weigh against inflationary risks. > My baseline features a still-uncertain inflation picture, with continued upside risks. The Federal Open Market Committee is widely expected to keep rates steady at its upcoming meeting on March 17-18, while markets continue to monitor for potential shifts later this year.
