Boston Fed President Susan Collins signaled in a WSJ interview that a rate cut in December is “certainly on the table. However, it remains far from being a “done deal”.

She emphasized the importance of upcoming economic data in shaping the Fed’s decision-making process, noting, “There’s more data that we will see between now and December, and we’ll have to continue to weigh what makes sense.”

Collins underlined her pragmatic approach, explaining, “I don’t see an argument for maintaining restrictive policy when there is not evidence of new price pressures.”

However, she also acknowledged that the inflationary dynamics that have persisted over the past year are “perhaps unevenly and gradually resolving over time.”

Fed Chair Jerome Powell conveyed in a speech overnight that the central bank sees no immediate need to reduce interest rates quickly. He added that with an “appropriate recalibration” of monetary policy, Fed believes it can sustain economic growth and robust employment while guiding inflation back down to its 2% target in a sustainable manner.

He highlighted that the risks to achieving the Fed’s employment and inflation objectives are “roughly in balance,” and emphasized that policymakers remain “attentive to the risks to both sides.”

Powell noted that Fed is gradually moving policy toward a “more neutral setting”. However, he stressed that the path to reaching this neutral rate is “not preset.”.

Importantly, Powell remarked that “the economy is not sending any signals that we need to be in a hurry to lower rates.” The prevailing economic strength provides Fed with the ability to approach monetary decisions “carefully.”

Full speech of Fed’s Powell here.

In a speech today, Fed Governor Adriana Kugler said the US sees “considerable disinflation” paired with a “cooling” yet “resilient” labor market. This dual scenario means Fed must continue “paying attention to both sides of our mandate,” referring to price stability and maximum employment.

On the inflation side, Kugler acknowledged recent moderation in wage growth and inflation expectations, noting these factors support further progress on inflation. However, she cautioned that persistent inflation in housing and specific goods and services sectors could “stall progress”.

Meanwhile, she highlighted rebalancing in the labor market, attributing this to increased labor supply from immigration and a stronger pool of prime-age workers, alongside lower demand resulting from tight monetary policy.

Kugler indicated that if risks arise that impede progress or cause inflation to reaccelerate, it would be appropriate to pause policy rate cuts. Conversely, if the labor market slows down suddenly, Fed should consider continuing to gradually reduce the policy rate.

Full speech of Fed’s Kugler here.