Boston Federal Reserve President Susan Collins said on Tuesday that the U.S. central bank may need to raise interest rates soon if upcoming inflation data does not show continued progress toward the Fed's 2% target.
Collins, in remarks posted to the Boston Fed's website, emphasized that the current policy rate range of 3.5% to 3.75% may not be sufficiently restrictive to ensure timely price stability. "Should evidence of sustained inflation progress not materialize, I believe it will be appropriate to tighten policy soon to ensure we deliver price stability in a reasonable time frame," she stated.
Economists polled by Reuters expect the core Personal Consumption Expenditures (PCE) price index, which excludes food and energy, to rise 3.3% year-over-year in July, unchanged from the prior month. The forecast follows a period of steady core PCE inflation since last year, driven in part by the Trump administration's import tariffs, elevated oil prices linked to geopolitical tensions in the Middle East, and substantial investments in artificial intelligence.
Collins noted that high prices remain a persistent concern among stakeholders in New England, where businesses and consumers continue to cite inflation as a key economic challenge. While she maintained a base case outlook that the current policy stance will gradually reduce inflationary pressures, she underscored the need for vigilance in monitoring incoming data.
The Fed has held its policy rate steady since December, awaiting clearer signs of sustained disinflation. The central bank's next steps will depend on whether upcoming inflation readings, including the July PCE data due Wednesday, align with expectations for gradual easing.
