Boston Fed President Susan Collins expressed her full support for Fed to keep interest rates unchanged last week, noting that continued economic uncertainty and inflation risks warrant a cautious approach.
Collins said that with upside risks to inflation still present, it would likely be appropriate to maintain current policy settings “for a longer time”. She stressed the importance of “active patience” and flexibility as Fed monitors the evolving economy.
One of the key factors now clouding the outlook is tariffs. Collins acknowledged that new tariffs will almost certainly raise inflation in the near term. However, the longer-term implications depend heavily on how other countries react and whether businesses pass costs onto consumers. These elements could determine whether the inflationary shock is temporary or more persistent.
