Boston Federal Reserve President Susan Collins on Wednesday said she will be reluctant to support further interest rate cuts anytime soon with inflation still high and policymakers hampered by a lack of data due to the government shutdown.
“Given my baseline outlook, it will likely be appropriate to keep policy rates at the current level for some time to balance the inflation and employment risks in this highly uncertain environment,” the central bank official said in remarks delivered in her home district. “I see several reasons to have a relatively high bar for additional easing in the near term.”
Collins’s comments are notable because she is a voting member of the rate-setting Federal Open Market Committee. Her remarks put her on the hawkish side of the rate debate, highlighting a fissure among committee members that led Chair Jerome Powell to say in October that a cut at the December meeting is not a foregone conclusion, despite market pricing of a high probability.
Collins supported the quarter percentage point rate cut at the October meeting but indicated that further easing could thwart the Fed’s efforts to get inflation lower.
While Collins said softness in the labor market “bears watching,” she added that the risks of inflation staying above the Fed’s 2% target warrant caution.
