Federal Reserve Bank of Boston President Susan Collins said Monday a changing inflation outlook tilted her toward supporting last week’s central bank interest rate cut.
“I supported last week’s {Federal Open Market Committee) decision to lower the target range for the federal funds rate by 25 basis points, although for me, it was a close call,” Collins said in a statement from her bank. “Available information suggested the balance of risks had shifted a bit” and “scenarios with a notable further rise in inflation seem somewhat less likely.”
Collins weighed in after last week’s move by the Fed to lower its target rate range to between 3.5% and 3.75%, as the officials work to balance ongoing inflation risks and rising softness in the jobs market. The Fed’s decision to cut rates was fractured: two policymakers wanted the Fed to hold steady while a third wanted a larger cut than the one policymakers opted for.
Ahead of the Fed meeting, comments made by Collins suggested her inflation concerns would put her in the camp of dissenters against a rate cut. Collins has been consistently worried about too high levels of inflation and the length of time they’ve been above the Fed’s target.
Collins’ unexpected dovishness did not translate into a new outlook for monetary policy.
“It was important to me that the forward guidance in the Committee’s statement now echoes language in the December 2024 statement, which preceded a pause in cutting rates,” the official noted.
“Given a policy stance that is at the lower end of a range I view as mildly restrictive, I would want greater clarity about the inflation picture before adjusting policy further, to ensure a timely return of inflation to the Committee’s 2 percent objective,” she said.
