Federal Reserve's Collins: Keeping interest rates unchanged for a period may be an appropriate approach

Golden Finance reports that this year’s FOMC voting member, Boston Fed President Collins, stated on Wednesday that she believes the threshold for further rate cuts in the short term is “relatively high” due to concerns about inflation remaining elevated. Collins voted in favor of a rate cut last month. “Unless there are clear signs of a significant deterioration in the labor market, I will remain cautious about further easing policies, especially given the limited inflation data we have due to the government shutdown… In the current environment of high uncertainty, maintaining the policy rate at its current level for a period of time may be appropriate to balance inflation and employment risks.” Her remarks highlight deep divisions within the Federal Reserve. Since the last rate cut, several Fed officials with voting and non-voting rights, including Collins, have signaled increasing caution about rate cuts. Collins believes that short-term borrowing costs are currently in a “mildly restrictive” zone, and the overall financial environment still provides tailwinds for economic growth. The labor market has indeed slowed, but downside risks have not worsened since summer.