Boston Federal Reserve President Susan Collins said on Thursday that recent U.S. inflation data showed mixed signals, keeping the door open for further interest rate increases if price pressures fail to ease as expected.
Speaking at the Kansas City Fed’s annual economic symposium in Jackson Hole, Wyoming, Collins acknowledged that the July Personal Consumption Expenditures Price Index rose 3.7% year-over-year, exceeding the Fed’s 2% target. However, she noted that much of the increase stemmed from components such as portfolio management fees, which are tied to equity valuations rather than underlying demand or supply conditions.
Collins reiterated her baseline view that inflation is likely to continue moderating gradually under the current policy stance, which she described as "modestly restrictive." She also pointed to additional disinflationary factors, including signs of improving productivity and indications that inflation linked to recent import tariffs may be stabilizing. While she did not rule out the possibility of further rate hikes, she emphasized that a broad-based pickup in market-driven prices would be a greater cause for concern.
On financial markets, Collins noted that recent increases in bond yields had not yet signaled a rise in inflation expectations. She cited measures of investor inflation compensation as remaining consistent with the Fed’s price stability mandate. When questioned about Treasury Secretary Scott Bessent’s recent intervention in bond markets, Collins declined to comment on the specifics of his actions.
The remarks come ahead of Friday’s keynote address by Fed Chairman Kevin Warsh, who is expected to provide further insight into the central bank’s policy trajectory amid evolving inflation dynamics.
