Boston Fed President Susan Collins pushed back against arguments for an immediate rate hike, saying latest inflation report was “mixed” and still consistent with gradual disinflation. While she acknowledged overall reading was “maybe a bit higher than I might have expected,” Collins said that once data were “unpacked,” there were “some promising signs in there.” She highlighted that monthly inflation in more market-driven goods and services was running around Fed’s 2% target, supporting her baseline that current policy can continue bringing inflation down.
Collins said “my modal scenario does continue to have that gradual disinflation,” under a policy stance she sees as slightly restrictive. She also argued some recent price pressures may prove temporary, pointing to higher portfolio-management fees linked to rising equity values, improved productivity and signs tariff-related inflation may be nearing exhaustion. Her threshold for greater concern would be broader persistence: “A very broad-based elevation, across market prices, would have been more concerning.” She nevertheless kept further tightening on table if disinflation fails to continue.
Her comments place Collins on more patient side of current Fed debate, in contrast with officials such as Beth Hammack, who said this week that “now is the time to act.” Collins also said recent rise in bond yields has not been accompanied by evidence of worsening inflation expectations, with market measures still “consistent with price stability.” That leaves her favoring a hold-and-watch approach for now, while keeping hike option open if inflation broadens or stops easing.
Key Takeaways
- Boston Fed President Susan Collins described latest inflation report as “mixed”, arguing headline strength overstated underlying pressure.
- Collins said that once data were “unpacked,” there were “some promising signs”, particularly in more market-driven goods and services.
- Her baseline remains “gradual disinflation”, with current policy viewed as slightly restrictive.
- Collins said a “very broad-based elevation, across market prices” would have been more concerning than latest composition.
- She remains open to another hike if disinflation stalls, but does not see current data as requiring immediate action.
- Collins also said market-based inflation compensation remains “consistent with price stability,” despite recent rise in Treasury yields.
- Her stance contrasts with more hawkish officials such as Beth Hammack, highlighting a live Fed debate over whether further tightening is needed now or later.
