Fed's Inflation Data Will Decide Next Move

Boston Fed President Susan Collins emphasizes that the Federal Reserve's next move will be determined by inflation data. She believes keeping interest rates unchanged makes sense, but only if inflation continues to cool.

Collins describes recent inflation numbers as 'mildly encouraging', but cautions that one or two favorable reports do not guarantee a win for the Fed. The central bank needs sustained progress toward its 2% inflation target before it can feel confident about its path forward.

The Fed's twin goals of price stability and maximum employment are at play, with Collins warning that cutting rates too quickly could undermine progress made in cooling inflation. At the same time, the gradual cooling in the labor market suggests the economy is losing momentum, which argues against further tightening.