Federal Reserve's Collins: Changing inflation outlook prompts support for interest rate cuts

Gold Financial reports that Boston Federal Reserve Chair Collins stated on Monday that changes in inflation outlook have made her inclined to support the Fed’s rate cut decision last week. In a statement, Collins said: “I support the decision of the Federal Open Market Committee (FOMC) to lower the federal funds rate target range by 25 basis points last week, although it was a difficult choice for me. The current information indicates that the risk balance has shifted slightly, and the likelihood of a significant further increase in inflation appears to have decreased.” Prior to the Fed meeting, Collins had hinted that her concerns about inflation might lead her to oppose the rate cut. She has been consistently attentive to the issue of excessively high inflation levels and its duration far exceeding the Fed’s target. However, Collins’ unexpectedly dovish stance this time has not translated into a new outlook on monetary policy prospects. She pointed out: “For me, it is crucial that the forward guidance in the committee’s statement remains consistent with the wording in the December 2024 statement, which paused the rate cut process after its release.”