Fed's Collins says tariff boost could delay rate cuts

The President of the Federal Reserve Bank of Boston, Susan Collins, indicated that the central bank may continue to lower interest rates. However, she highlighted that growing inflation resulting from President Trump's tariff policies could potentially delay this decision.

Collins stated that in the current economic conditions the best approach would be to keep interest rates unchanged. She anticipates a slowdown in the US economic recovery but does not foresee a major downturn. The head of the Boston Fed expressed confidence that inflation will return to the 2% target and reassured that financial markets remain liquid and stable.

She emphasized the importance of inflation expectations in shaping monetary policy, noting it’s crucial to ensure that tariffs do not undermine those in order to cut rates.

While most long-term forecasts for price growth remain steady, Collins pointed out that a sudden increase in the University of Michigan index warrants close attention.