Fed Signals Possible Rate Rise as Inflation Remains Above Target

The U.S. Federal Reserve is considering raising interest rates as inflation remains above its 2% target. Boston Fed President Susan Collins says a rate increase is likely soon unless upcoming data shows sustained decline in price pressures.

Collins signaled possible tightening of policy if sustained inflation progress does not appear soon, saying that price stability must be restored within a reasonable time frame. The current policy rate has been at 3.5% to 3.75% since December.

Economists expect the core Personal Consumption Expenditures price index to rise at a 3.3% annual rate in July, unchanged from June and above the Fed's target. Collins says she still expects inflation to ease but warns that the Fed cannot wait indefinitely after inflation has remained above target for more than five years.