Boston Federal Reserve President Susan Collins said on Thursday that recent U.S. inflation data showed mixed signals, with the July Personal Consumption Expenditures Price Index rising 3.7% year-on-year—above the Fed’s 2% target—while underlying components suggested disinflation may proceed without additional policy tightening.
Speaking at the Federal Reserve’s annual economic symposium in Jackson Hole, Wyoming, Collins noted that monthly inflation for goods and services with market-determined prices tracked near the central bank’s target. She attributed some of the headline strength to rising portfolio management fees linked to equity valuations rather than supply-demand imbalances, reinforcing her view that inflation could ease further under the current policy stance.
Collins’s base case remains that gradual disinflation will continue with the policy rate at a "modestly restrictive" level. However, she emphasized that the Federal Reserve would not hesitate to raise rates if incoming data fail to align with the projected decline in inflation. Her remarks preceded a potential keynote address by Fed Chairman Kevin Warsh on Friday addressing the inflation outlook.
Boston Fed research cited by Collins indicated that additional disinflationary pressures could emerge from improved productivity and the waning impact of the Trump administration’s import tariffs. The central bank is also monitoring recent increases in bond yields, though Collins said market-based measures of inflation compensation have not signaled a shift in expectations toward higher prices.
On the sidelines of the event, Collins declined to comment on Treasury Secretary Scott Bessent’s recent interventions in the bond market.
