Boston Fed's Collins Signals Caution on Further Rate Cuts Amid Inflation Concerns

Friday Nov 14 2025 00:00

Duration

2 min

  1. 0.1 Collins: Patience Needed on Rate Cuts

Collins: Patience Needed on Rate Cuts

Boston Federal Reserve President Susan Collins indicated Wednesday that she is unwilling to quickly support further interest rate cuts, given persistently high inflation and the challenges policymakers face due to potential data gaps resulting from a government shutdown. Speaking in her home region, Collins stated, "From my baseline outlook, holding the policy rate at its current level for some time may be appropriate, balancing risks to both inflation and employment in the current highly uncertain environment. I believe there are several reasons that set a relatively high bar to further easing in the near term." Collins's remarks are noteworthy because she is a voting member of the Federal Open Market Committee (FOMC), which sets interest rates. Her comments place her in the 'hawkish' camp of the rate debate, highlighting internal divisions within the Committee. This division is precisely what prompted Fed Chair Jerome Powell in October to signal that a December rate cut was not a foregone conclusion, despite strong market expectations for one. At the October meeting, Collins supported the decision to cut interest rates by 25 basis points, but she also signaled that further easing could hinder the Fed's efforts to reduce inflation. While Collins described labor market "softening" as "worthy of attention," she added that the risk of inflation remaining persistently above the Fed's 2% target requires them to remain cautious. "Against that backdrop, providing additional monetary accommodation to economic activity risks slowing or even reversing progress towards restoring price stability. And with demand proving resilient, the downside risks to employment, while real, do not seem to have intensified further since the summer," she said. Collins also specifically mentioned the role of a government shutdown in their decision-making process. While the standoff appears to have ended, the White House press secretary said Wednesday that key inflation and employment reports for October may not be released at all. "Unless I see evidence of a significant weakening in the labor market, I would be hesitant to ease further, especially given the limited information on inflation due to the government shutdown," Collins said. The FOMC approved the rate cut at its October meeting by a vote of 10-2. Governor Mian voted against the decision because he wanted a larger rate cut, and Kansas City Fed President Schmid also opposed it because he preferred not to cut rates.

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Written by:

Noah Lee

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