Federal Reserve Bank of Boston President Susan Collins has said the U.S. economy remains strong enough to delay Fed rate cut decisions. Collins said solid growth and healthy household finances allow the central bank to stay “actively patient.”
Collins Says Strong Economy Allows Delay in Fed Rate Cut While Monitoring Tariff Impact
She stated this during a speech on Tuesday at a Washington event hosted by business economists (the NABE Foundation’s 22nd Annual Economic Measurement Seminar). That means the Fed will continue to watch inflation data closely before deciding on any Fed rate cut or policy change.
According to her, the current economic strength gives officials time to carefully assess new developments. One of those developments is the ongoing impact of tariffs.
Collins acknowledged that tariffs are starting to affect the prices of some goods. However, she said the damage may be less than expected. The Fed official explained that some companies are choosing to accept smaller profit margins instead of passing costs to consumers.
Meanwhile, American households are still spending even as prices rise. That spending strength is helping reduce the negative effects of tariffs on the broader economy, which in turn lowers the urgency for a Fed rate cut.
She also noted that recent inflation data shows a mixed picture. June’s consumer price report showed inflation rising more slowly than economists expected. But Collins warned that price pressures from tariffs are still building in some areas.
Cut Depends on Clearer Inflation Data
To help understand these changes, the Boston Fed developed a new tool. This tool measures how price increases at the U.S. border are passed on to consumers. Collins said this work will help the Fed track how tariffs affect inflation more accurately before deciding on any Fed rate cut.
Looking ahead, she predicted that the Fed’s preferred inflation gauge may rise to around 3% by the end of the year. In May, that measure stood at 2.7%. After peaking, Collins believes inflation will start to fall again, potentially clearing the way for a future Fed rate cut.
Fed officials have held interest rates steady in 2025 while monitoring inflation and growth. Collins said this approach remains the right one given current conditions and said the timing of any Fed rate cut should be based on clearer evidence. Her message aligns with the cautious stance taken by Cleveland Fed President Hammack, who also argues that inflation is still too high to justify a Fed rate cut.
Meanwhile, Bitcoin price dropped after the release of June’s CPI data. At 2.7% year-over-year, the data was slightly higher than expert estimates, reinforcing expectations that a Fed rate cut may not happen soon.
Paul
Paul Adedoyin is a crypto journalist with 4+ years experience who provides timely news, in-depth research, and insightful content to inform and empower his audience. His works have been featured on sites such as CryptoMode, CryptoNewsFlash among others.
He holds a degree in Geophysics from OAU, Nigeria. When he’s not writing, he loves watching soccer and reading educative journals.
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