Boston Fed President Susan Collins said she could support a rate increase in September if inflation fails to ease sufficiently, highlighting persistent cost-of-living pressures intensified by Iran war. Speaking in an interview with Financial Times on Wednesday, Collins said, “I do see the possibility that economic conditions in the coming months will require tighter policy, and I would be prepared to raise rates in that context.” She supported keeping rates unchanged in July and currently views monetary policy as only “slightly restrictive.”
Collins said inflation has continued to squeeze businesses and households across US Northeast, with price concerns surfacing in nearly every conversation with firms. Pressure is particularly acute for lower- and middle-income households, she said, with some struggling to “make ends meet” as elevated energy costs add to broader affordability problems.
While Collins expects inflation to continue declining gradually, she stressed that price growth has remained above Fed’s 2% target for more than five years, leaving policymakers with little room for complacency.
Her remarks reinforce Fed’s increasingly difficult September trade-off. Recent labor-market weakness has strengthened case for holding rates, but persistent inflation and renewed energy pressure could still justify further tightening if upcoming data disappoint. Collins is not currently a voting member of FOMC, but her willingness to contemplate a September hike adds to hawkish argument that current policy may not yet be restrictive enough to ensure inflation returns sustainably to target.
