(Feb 25): Federal Reserve (Fed) Bank of Boston president Susan Collins said interest rates are likely to stay unchanged “for some time” as recent economic data shows an improvement in the labour market, while risks to inflation remain.
The labour market is showing “at least some more signs of an unusual kind of stability,” Collins said on Tuesday during a panel discussion hosted by the Boston Fed. She also pointed to the need for more evidence that inflation is coming down towards 2%.
“I think that it’s quite likely that it will be appropriate to hold the current range for some time,” she said. “After 175 basis points of easing over the past year and a half, we are at mildly restrictive, perhaps quite close to neutral already,” Collins said, referencing the level at which interest rates neither stimulate nor restrain the economy.
Amid signs of weakness in the labour market, Fed officials lowered rates by a percentage point in late 2024, and by another three-quarters of a point in the closing months of 2025.
Policymakers held rates steady last month and a surprise fall in the unemployment rate in January may allow officials to do the same in March.
A number of Fed officials, including some who had advocated for rate cuts, have recently said risks to employment have diminished. Others have voiced concerns about continued price pressures as inflation remains above the Fed’s 2% goal.
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Richmond Fed president Tom Barkin, who also took part in the discussion, said he still sees risks on both sides of the central bank’s mandate.
“Nobody wants inflation to stall, nobody wants the labour market to weaken further,” he said. “We are well positioned.”
Tariff ruling
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In other remarks, Collins became the latest Fed official to comment on the Supreme Court’s decision to strike down many of US President Donald Trump’s sweeping global tariffs, adding to the widely ranging comments on the topic.
Like many of her colleagues, Collins said the ruling injects more uncertainty into the economic outlook. She also said it may adds to risks that inflation will remain persistent.
“If you think about those firms that had tariff increases and pass them through as higher prices to consumers, it’s hard for me to see that they are going to pull that back,” she said.
Earlier on Tuesday, Chicago Fed president Austan Goolsbee agreed the decision adds to uncertainty, but suggested it could bring some relief on the inflation side.
Others, like Fed governor Christopher Waller, have said they don’t expect the ruling to significantly affect the outlook for monetary policy.
Uploaded by Isabelle Francis
