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Boston Fed President Collins argues for hold-and-watch on rates

Collins said monthly inflation in more market-driven goods and services is running around the Fed’s 2% target, supporting her view that gradual disinflation continues under slightly restrictive policy.

Reported · Written up by our desk · Central Banks

Boston Fed President Susan Collins pushed back against calls for an immediate rate hike, saying the latest inflation reading was mixed but still consistent with gradual disinflation, according to remarks covered by Action Forex.

Collins noted the overall inflation picture could be “a bit higher than I might have expected,” but said the details, once unpacked, showed “some promising signs,” including monthly inflation in more market-driven goods and services running around the Fed’s 2% target. She said her modal scenario remains gradual disinflation with the current policy stance, which she described as slightly restrictive.

She argued that some recent price pressures may prove temporary, pointing to higher portfolio-management fees associated with rising equity values, improved productivity, and signs that tariff-related inflation may be nearing exhaustion. She said the threshold for greater concern would be broader persistence, specifically a very broad-based elevation across market prices.

Collins also said the recent rise in bond yields has not been accompanied by evidence of worsening inflation expectations, with market measures still consistent with price stability. While she favored a hold-and-watch approach, she said further tightening remains on the table if disinflation fails to continue or broad-based inflation pressures emerge.

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