Boston Fed's Collins Supports Modestly Restrictive Policy, May Back 2025 Rate Cuts If Data Allows

Boston Federal Reserve President Susan Collins supports the recent 25-basis-point interest rate cut and views the current "modestly restrictive" monetary policy stance as appropriate to balance reducing inflation while limiting labor market weakening. She indicated that further rate cuts may be appropriate in 2025 if inflation data and economic conditions support easing, though she remains cautious due to persistent inflation risks. Collins noted that the labor market is softening, which reduces upside inflation risks compared to previous months, but policymakers must remain vigilant about potential unemployment increases. The Federal Reserve's vice chair, Philip Jefferson, also expressed concerns about rising unemployment risks and emphasized the need to evaluate policy based on incoming data. There is ongoing debate within the Fed regarding the pace and depth of future rate cuts, reflecting diverging views among policymakers amid an uncertain economic environment. Overall, Fed officials are signaling caution while acknowledging the possibility of gradual easing if supported by economic data.