Fed's Collins Backs Additional Rate Hike Before Year-End as Inflation Risks Persist

Boston Federal Reserve President Susan Collins signaled that another quarter-point interest rate increase will likely be necessary before the end of the year to return inflation to its 2% target. Speaking at a Boston Fed banking conference, Collins supported the September rate hike that set the policy range at 3.75%-4.00%. While economic growth remains resilient and labor markets stable, Collins noted that economic uncertainty is elevated. She highlighted persistent inflation risks driven by AI infrastructure spending, trade tariffs, and Middle East energy costs, alongside August headline PCE inflation of 3.4% and core PCE of 3.0%.