COLLINS BACKS FED RATE RISE, WARNS INFLATION MAY STAY HIGH

Susan Collins, president and chief executive of the Federal Reserve Bank of Boston, said she backed last week's quarter-point rise in US interest rates. Writing on LinkedIn, she said there is now an "increased likelihood" of inflation remaining "notably" above the Federal Reserve's 2% target. Collins said a "somewhat more restrictive" federal funds rate would help ensure inflation "durably returns to target". She said upside risks to inflation have increased, while labour market conditions "seem a bit stronger overall" and unemployment remains low. She said the firmer labour market allows monetary policy to focus on a "timely return to price stability".

According to the report, Collins takes part in Federal Open Market Committee meetings and contributes to its discussions but does not currently hold a vote on interest rate decisions. During 2025, when it was the Boston Fed's turn in the reserve banks' annual voting rotation, she voted with the majority at all eight FOMC meetings that year, the report states. That included backing a decision to hold rates in July, followed by support for quarter-point cuts in September, October and December. Collins said the current stance follows "five and a half years of too high inflation".

Collins' remarks came alongside similar comments from other central bank officials, according to the report and a corroborating account. Richmond Federal Reserve President Tom Barkin warned it could take time for inflationary pressures to fade and said there was a risk elevated pressures could become entrenched, according to a Bloomberg report. European Central Bank executive board member Philip R. Lane said energy prices would keep inflation "higher for longer", the report added. Markets remain divided over whether the Fed will raise rates again at its October meeting, with CME Group's FedWatch tool showing 53.1% of traders pricing in a further quarter-point increase, according to the report.