Fed's Collins Warns Inflation May Remain Above 2% Target

Boston Federal Reserve President Susan Collins has warned that there is an increased likelihood of inflation staying notably above the Fed's 2% target. She explained her reasoning for backing the Fed's quarter-point interest rate hike last week by stating that a 'somewhat more restrictive federal funds rate will help ensure that inflation durably returns to target.'

Collins, who takes part in FOMC meetings and helps shape the discussion but is not currently a voting member, voted with the majority at all eight FOMC meetings in 2025. She wrote in a LinkedIn post that 'given all the available information, I now see an increased likelihood of future scenarios in which inflation remains notably above 2 percent.'

The upside risks to inflation have increased, labor market conditions seem a bit stronger overall, and the unemployment rate remains low. With the labor market on a better footing, Collins believes that monetary policy can focus on a timely return to price stability.