Collins: Rate Hold Conditional on Inflation Progress

Boston Fed President Susan Collins has stated that maintaining the current federal funds rate target range is contingent on further evidence of inflation moving toward the central bank's 2% target. In a recent essay, Collins noted that while recent inflation data has shown subdued underlying price pressures, monthly readings can be volatile and it remains to be seen whether improvements will be sustained.

Collins expressed support for keeping interest rates steady for now, but cautioned that if such progress does not materialize, tightening policy soon would be appropriate. The comments come ahead of the Federal Reserve's next scheduled meeting on September 15-16 in Washington.

Collins also noted that restrictive interest rates, along with higher longer-term yields, should help mitigate inflationary pressures from strong household and business consumption. However, she warned of less benign scenarios, including upside risks to inflation from additional adverse supply shocks and a stronger-than-expected pace of economic activity.