Federal Reserve Bank of Boston President Susan Collins said on Tuesday the U.S. central bank will likely need to raise interest rates in the near term unless incoming data shows a continued decline in inflation, which remains elevated.
Speaking at an event in Washington, Collins noted that while her baseline outlook assumes current policy will continue to ease price pressures, the risk of persistent inflation has become a widespread concern among businesses and households in New England. She emphasized that without clear evidence of sustained disinflation, a more restrictive monetary stance would be warranted to ensure price stability is achieved within a reasonable timeframe.
Collins' remarks follow a string of stronger-than-expected U.S. inflation readings in recent months, which have tempered market expectations for imminent rate cuts. The Boston Fed chief's comments underscore the Fed's heightened sensitivity to inflation persistence despite progress on cooling price growth earlier in the year. Her warning comes as policymakers weigh the balance between maintaining restrictive policy to curb inflation and avoiding undue economic drag.
The Fed has held its benchmark federal funds rate at a 23-year high of 5.25%-5.50% since July 2023, a level maintained to combat inflation that peaked above 9% in mid-2022. While year-over-year inflation has eased from those peaks, recent data has shown stickiness in core services and housing costs, complicating the path to the Fed's 2% target.
Collins' position aligns with a growing cohort of Fed officials who advocate for maintaining higher rates for longer, even as some market participants price in potential easing by mid-2025. Her remarks were delivered during an April 14, 2026 event in Washington, D.C., and reported by Reuters on August 25, 2026.
