Boston Fed Chairman Collins Signals Hawkishness

Boston Fed Chair Collins expressed her concerns about the current price volatility in a speech at the Boston Economic Club on Wednesday, stating clearly that the Federal Reserve needs to keep the current interest rates unchanged for a "considerable period."

Collins emphasized that the inflation rate has been persistently higher than the target level for the past five years, which has significantly reduced her tolerance for supply shocks. She bluntly stated that her "insight" into and patience for ignoring further significant price volatility is becoming lower and lower.

Nevertheless, Collins still holds hope for the normalization of policy later this year. However, she also gave a warning that if inflation cannot return to the target of 2%, she can even foresee scenarios where further tightening of policy is needed.

The US economy has shown great resilience under the impact of tariff policies and skyrocketing energy prices. Although the labor market has softened to some extent, the unemployment rate is still relatively low by historical standards.

Collins believes that part of the reason for the inflation exceeding the limit lies in the continued impact of tariffs on commodity prices. At the same time, strong demand gives companies more pricing power, and productivity gains have not yet been sufficient to quickly alleviate price pressures.

Collins' stance sends a clear hawkish signal, implying that the window for rate cuts may be later than the market expects. In the short term, the market's optimism about a shift in monetary policy may cool due to the cautious statements of Federal Reserve officials.