The chief of the Boston Federal Reserve said inflation has slowed faster than expected and that a reduction in interest rates would be suitable “later in the year” but added that the central bank wants more certainty before it cuts interest rates.
“We are on a path to price stability with inflation durably at 2%,” Susan Collins said in a speech on Wednesday to the Boston Economic Club.
If the progress continues, Collins indicated, the Fed could begin “later in the year” to unwind the series of interest-rate increases made in 2022 and 2023 to tame inflation.
Still, Collins cautioned that the Fed needs more evidence that a 2% rate of inflation can sustained.
She pointed to the surprisingly robust U.S. jobs report in January as a sign that a strong economy could maintain upward pressure on wages and prices. There could be some bumps before inflation fully meets Fed goals, she said.
Top Fed officials have made a full-court press to persuade investors that they won’t be cutting interest rates very soon. Wall Street now expects that the first rate reduction won’t take place until May, rather than in March as many investors previously anticipated.
Collins is not a voting member this year of the Fed panel that sets U.S. interest rates.
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