Collins Sees Gradual Disinflation Amid Mixed US Inflation Report
Boston Federal Reserve President Susan Collins described the latest US inflation report as 'mixed' at the Fed's annual economic symposium in Jackson Hole, Wyoming. The Personal Consumption Expenditures Price Index rose at a 3.7% annual rate in July, higher than expected but driven by various factors that don't necessarily call for interest rate hikes.
Collins cited the rise in portfolio management fees, which she attributed to stock values rather than supply and demand conditions, as one example of an inflation driver that shouldn't prompt a rate increase. She noted that monthly inflation for goods and services where prices are set by market forces was around the Fed's 2% target.
Collins expressed confidence in her 'modal scenario' of gradual disinflation under current policy interest rates, which she sees as slightly restrictive. Research from the Boston Fed also pointed to improved productivity and indications that inflation linked to Trump administration tariffs may have peaked.