Collins Says Inflation Readings Are 'Mixed' Amid Higher Headline Rate

Fed's Collins says latest US inflation readings are 'mixed'.

Boston Federal Reserve President Susan Collins said the latest U.S. inflation report was 'mixed,' with the headline rate stronger than expected but driven higher by a patchwork of forces that on their own shouldn't push the U.S. central bank towards raising interest rates.

The Personal Consumption Expenditures Price Index rose at a 3.7% annual rate in July, well above the Fed's target, prompting some of Collins' colleagues to say it was time for rates to rise. However, Collins noted that once the data was 'unpacked,' there were 'promising signs' including the fact that monthly inflation for goods and services where prices are set by market forces was around the Fed's 2% target.

Collins said she had been watching the recent rise in bond yields, which have a direct bearing on the outlook for economic activity. She noted that estimates of the inflation compensation demanded by investors or seen in the pricing of inflation-protected securities are 'consistent with price stability,' and that she did not think they showed any evidence that inflation expectations were beginning to rise.