Mixed Signals: Collins Says US Inflation Report Doesn't Clearly Call for Rate Hikes

Boston Federal Reserve President Susan Collins said that the latest US inflation report was 'mixed', with the headline rate stronger than expected but driven higher by various factors.

Citing a rise in portfolio management fees, driven by stock values rather than supply and demand conditions, Collins noted that this factor shouldn't push the central bank towards raising interest rates on its own.

However, she emphasized her readiness to raise rates if inflation doesn't fall as expected. The Personal Consumption Expenditures Price Index rose at a 3.7% annual rate in July, well above the Fed's target of 2%, prompting some colleagues to call for rate hikes.

Collins pointed out that Boston Fed research suggests other reasons why price pressures may ease, including improved productivity and indications that inflation linked to Trump administration import tariffs may have almost run its course.