Susan M. Collins, president and CEO of the Federal Reserve Bank of Boston, said she opposes interest rate cuts as the Iran war pushes inflation to a three-year high.
Susan M. Collins, president and CEO of the Federal Reserve Bank of Boston, said she opposes interest rate cuts as the Iran war pushes inflation to a three-year high.
Collins said her primary concern right now is inflation, which reached 3.8% in April, moving further away from the Fed’s 2% target, figures showed Tuesday.
“I believe it will likely be important to maintain the current slightly restrictive monetary policy stance for some time,” Collins said in remarks to the Boston Economic Club on Wednesday. The Boston Fed promotes financial stability in the New England states.
U.S. central bankers last cut interest rates on Dec. 10, 2025, reducing the benchmark federal funds rate by 25 basis points to a target range of 3.50% to 3.75%. Stubborn inflation has since shifted the Fed into a more neutral stance.
The surge in the cost of living is among the economic factors confronting the incoming Fed chairman, Kevin Warsh, who was confirmed by the U.S. Senate on Wednesday. He will succeed Jerome Powell, who will stay on the Fed’s board for the time being.
Collins said low unemployment and burgeoning investment in artificial intelligence will keep the U.S. economy on a growth track, shielding it from the worst effects of the curtailment of global crude oil supplies due to the closure of the Strait of Hormuz.
Collins held out hope for a “benign outcome” with the Fed resuming interest rate cuts later this year. However, she didn’t rule out higher rates in the event of a longer-lasting Middle East conflict weighing on global energy supplies and keeping inflation elevated.
“While it is not my most likely outlook, I could envision a scenario in which some policy tightening is needed to ensure that inflation returns durably 2% in a timely manner,” she said.
