Boston Fed President warns rates may rise soon unless upcoming data confirms sustained inflation decline toward 2% target.
Boston Federal Reserve President Susan Collins indicated interest rates will likely need to rise soon unless inflation data shows continued progress toward the central bank’s 2% target. Current policy may support gradual disinflation, but persistent price pressures remain a concern for businesses and households across New England, she said.
Economists expect Wednesday’s core Personal Consumption Expenditures (PCE) price index to hold at a 3.3% annual rate for July, unchanged from June and well above the Fed’s goal. Core PCE, a key inflation gauge, has risen steadily due to factors including tariffs, oil prices, and AI-driven investments, Fed officials noted.
The Fed’s benchmark rate currently stands at 3.5% to 3.75%. Collins emphasized that without clear evidence of inflation cooling, further tightening may be necessary to ensure price stability within a reasonable timeframe.