Fed’s Collins methodical, forward-looking approach to rate cuts

Boston Fed President Susan Collins suggested that it may become “appropriate to begin easing policy later this year,” highlighting the importance of a “methodical, forward-looking approach” to gradually reduce rates.

Collins anticipated further inflation deceleration would might necessitate further slowdown in economic activity. However, she noted the “considerable uncertainty” surrounding the magnitude and timing of this slowdown. The path ahead, as Collins notes, is expected to be “bumpy,” as suggested by hotter-than-expected employment and price increase readings.

In this context, it will be important to focus on seeking “sustained, broadening signs” of progress towards its dual mandate goals, acknowledging that such progress may unfold unevenly. Collins cautions against setting overly stringent expectations for the data, indicating that “expecting all data to speak uniformly is too high a bar.”