Speaking to Bloomberg during the Jackson Hole Economic Symposium, Boston Fed President Susan Collins stated that the interest rate decision to be taken at the next Fed meeting is not yet clear.
Collins emphasized that while labor market growth has slowed, economic fundamentals remain solid, adding, “This is a complex picture. We need to balance both the potential rise in unemployment and the risks of inflation.”
Collins stated that monetary policy is currently “moderately restrictive,” which is appropriate given current conditions. However, he argued that data releases in the next four weeks will be critical. “We’ll see more data before we make a decision,” he added. “Nothing is certain right now; all options are on the table.”
The Boston Fed President stated that they are closely monitoring the inflationary pressures of tariffs. Collins said, “Tariffs have a broad impact on intermediate goods, not just direct imports. Therefore, we expect inflation to remain elevated until the end of the year. My baseline scenario is for it to decline next year, but I don’t rule out the possibility of a more persistent impact.”
Regarding the labor market, Collins noted that employment growth has slowed, but some indicators remain strong. “If the risk of layoffs increases, it may be appropriate to reduce the restrictive nature of policy,” he said.
*This is not investment advice.