The chief of the Boston Federal Reserve, Susan Collins, revealed that inflation has been slowing down at a faster pace than expected. However, she emphasized that the central bank would require more certainty before making any cuts to interest rates.
In a speech delivered on Wednesday to the Boston Economic Club, Collins expressed confidence in the progress being made towards achieving price stability with inflation consistently at 2%.
If this positive trend continues, Collins hinted that the Fed could potentially begin unwinding the series of interest-rate increases implemented in 2022 and 2023 to combat inflation. This unwinding process may occur “later in the year.”
Nevertheless, Collins cautioned that the Fed needs additional evidence proving that a 2% rate of inflation can be sustained over time.
To support her point, Collins highlighted the surprisingly robust U.S. jobs report in January, suggesting that a strong economy may exert upward pressure on wages and prices.
Top officials at the Federal Reserve have actively reassured investors that interest rate cuts will not happen imminently. As a result, analysts on Wall Street have now revised their expectations, predicting that the first rate reduction may occur in May rather than March.
It is important to note that Collins herself is not a voting member this year of the Fed panel responsible for setting U.S. interest rates.