Fed’s Collins sees mixed inflation data, remains open to rate hikes

Investing.com -- Boston Federal Reserve President Susan Collins said Thursday the latest U.S. inflation report showed mixed results, with the headline figure coming in stronger than anticipated but driven by factors that may not warrant interest rate increases.

Speaking at the Fed's annual economic symposium in Jackson Hole, Wyoming, Collins pointed to rising portfolio management fees linked to stock values rather than supply and demand conditions as one element that kept her outlook tilted toward inflation declining without policy intervention.

The Personal Consumption Expenditures Price Index climbed at a 3.7% annual rate in July, above the Fed's target. Collins acknowledged the overall number ran slightly higher than expected, but said a closer examination revealed encouraging signs. Monthly inflation for goods and services with market-determined prices tracked near the Fed's 2% target.

Collins said her base case continues to project gradual disinflation under the current policy rate, which is viewed as modestly restrictive. She added that Boston Fed research suggested additional reasons price pressures could ease, including improved productivity and signs that inflation tied to the Trump administration's import tariffs may be nearing completion.

The Fed official said she stands ready to raise rates if inflation does not decline as anticipated. She noted a broad-based price increase across market prices would have raised greater concern.

Collins said she has monitored the recent rise in bond yields, which directly affect economic activity prospects. She indicated the movement has not shown evidence of rising inflation expectations so far, with inflation compensation measures from investors remaining consistent with price stability.

Fed Chairman Kevin Warsh may address the inflation situation Friday in his keynote speech to the conference.

When asked about Treasury Secretary Scott Bessent's recent bond market intervention, Collins declined to comment on his specific actions.

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