Federal Reserve Bank of Boston President Susan Collins spoke on Tuesday about the state of the economy and the Federal Reserve Bank at the Greater Boston Chamber of Commerce. She claimed that the policy is not on a preset path; there are scenarios that would keep rates steady, and that policy would remain restrictive even with more easing.

Key Comments

Policy not on pre-set path, there are scenarios that would keep rates steady.

Expects more growth, small rise in unemployment, inflation elevated.

Favorable financial conditions will support households.

Downside risks to job market have risen.

Inflation should begin to ease as tariff impact wanes.

Inflation risks have become more contained, but tariffs will still push up prices.

Policy would remain restrictive even with more easing.

We expect relatively modest further rise in unemployment.

As uncertainty fades, would expect hiring to increase.

It is prudent to normalize rates a bit further in 2025

The downside risks to the labor market have likely risen.

Breakeven job growth rate could be around 40k a month.

Inflation continues to be top of the mind.

I have long expected tariffs would take some time to work through the economy.

I expect hiring will improve over the longer horizon.

Consumer sentiment measures aren't particularly strong and sentiment hasn't been the best predictor of consumption.

The job market risks suggest more easing is needed.

Perhaps another 25 bps of easing might be appropriate."