The Federal Reserve spent the first part of 2025 cutting rates. Now several of its most prominent officials are openly discussing the possibility of reversing course entirely.
Most Fed officials have warned they might raise interest rates if inflation remains stubbornly above the central bank’s 2% target. The current benchmark rate sits at 3.5% to 3.75%, following cumulative cuts totaling 75 basis points earlier this year. That easing cycle is looking increasingly like it may have been premature.
The hawkish chorus gets louder
Boston Fed President Susan Collins has voiced support for holding rates steady at current levels. But she’s also made clear that rate hikes are very much on her radar if economic conditions warrant them.
Chicago Fed President Austan Goolsbee has taken a deliberately ambiguous stance, noting that both cuts and hikes remain viable options depending on how the data evolves. In English: the Fed is no longer married to the idea that rates only go in one direction from here.
