Fed’s Collins advocates gradual and patient approach on rate cuts

Boston Fed President Susan Collins noted in a speech today that the economy is overall in a “good place” and inflation steadily retreating from its 2022 peak. She added that current monetary policy is already closer to a neutral stance, allowing Fed to proceed with a “gradual and patient approach” as it evaluates further steps.

Collins acknowledged the significant progress in lowering inflation, describing it as moving “gradually, if unevenly,” toward Fed’s 2% target. Importantly, this progress has been achieved alongside a “healthy overall” labor market that has shown signs of rebalancing from previously overheated conditions.

Reflecting on Fed’s decision to cut rates last month, Collins her support as a “close call,” as the move provided “some additional insurance” to support the labor market while maintaining a restrictive stance necessary to restore price stability.