Boston Fed’s Collins supports September rate hike if inflation remains high: FT

Boston Federal Reserve President Susan Collins has stated she would back a rate increase in September if inflation remains elevated, according to the Financial Times. This comes after the Federal Reserve held its rates steady in July, maintaining a target range of 3.50%–3.75%. Collins’ remarks underscore the Fed’s ongoing concerns about inflation, which continues to exceed its 2% target. Her comments add to the speculation regarding the Fed’s next moves in response to inflationary pressures, with the policy stance appearing more hawkish if conditions do not improve.

Key Takeaways

• Collins’ statements suggest a more aggressive Fed stance if inflation does not decrease, consistent with a potential rate hike in September.
• Current market pricing reflects a decreased likelihood of rate cuts in upcoming Federal Reserve meetings from July to October 2026.
• The possibility of a rate increase in September aligns with recent market movements indicating lower odds for a rate cut.

What to Watch

Market participants will be closely monitoring upcoming inflation data releases, particularly the PCE price index, to gauge the likelihood of the Fed’s actions in September. Fed Chair Kevin Warsh’s comments and the September FOMC Dot Plot will be key indicators for market expectations. A continued rise in core CPI or PCE above 3.0% could further support the scenario of a rate hike, while a moderation in inflation might shift expectations.

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Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.