Fed’s Collins sees no urgency for rate cuts amid inflation

Investing.com -- Federal Reserve Bank of Boston President Susan Collins said Friday she sees no immediate need to adjust interest rates, with any future monetary policy easing dependent on inflation moving closer to the 2% target.

"Based on my outlook I see a patient, deliberate approach as appropriate" and "I do not see an urgency for additional policy adjustments," Collins said in a speech delivered at a gathering in Springfield, Massachusetts.

Collins said her baseline outlook includes a still-uncertain inflation picture with continued upside risks. Combined with recent evidence of a relatively stable labor market, this supports maintaining policy rates at their current, mildly restrictive levels for some time, she added.

The federal funds target rate currently stands between 3.5% and 3.75%.

To support easing monetary policy, Collins said she will look for "clear evidence" that still-elevated inflation is moving back to the target, which "might occur" only in the latter half of this year.

Collins noted that considerable economic uncertainty remains, made worse by recent geopolitical developments like the hostilities in the Middle East. Despite this, her baseline outlook is fairly benign, featuring continued solid economic growth, relatively balanced labor market conditions, and disinflation resuming later this year as tariff effects fade.

On the job market, Collins said artificial intelligence could affect hiring rates. While hiring could pick up relative to last year's sluggish pace, job gains are likely to remain modest, she said.

Collins spoke on the same day government data showed unexpected job losses in February that could signal further weakness in the job market. The Fed lowered its interest rate target by three quarters of a percentage point last year to help support a weakening labor sector.

The Fed faces additional challenges from surging energy prices tied to the U.S.-Israel war on Iran. Rising gasoline prices could further drive up inflation and unmoor inflation expectations, which could complicate any Fed move to cut rates to help steady the job market.

The Fed is widely expected to hold interest rates steady at its March 17-18 Federal Open Market Committee meeting, with markets still projecting some combination of cuts later this year.

You May Also Be Interested In

• Corning (GLW) files for up to $2B offering of common shares
• 1844 Resources closes private placement raising $947,650
• GMR Solutions to reprice $2.9B term loan, pay down $200M in debt