MNI BRIEF: Fed's Collins Sees Further Easing This Year

Federal Reserve Bank of Boston President Susan Collins said Tuesday tamer inflation and a softer labor market may call for further monetary easing this year. 

"With less scope for inflationary pressures from the labor market, the upside inflation risks I was concerned about a few months ago are more limited. In this context, it may be appropriate to ease the policy rate a bit further this year," she told the Council on Foreign Relations.

Her baseline outlook is similar to that of the median in the September FOMC projections, she said, which would mean rate cuts at both this year's remaining meetings. She doesn't see the labor market softening much further, but there's "some increased risk that labor demand may fall significantly short of supply, leading to a more meaningful and unwelcome increase in the unemployment rate."

"I anticipate hiring will pick up as firms adjust to the new tariff environment. And while inflation is likely to remain elevated into next year, I expect it to resume its gradual return to target over the medium term," she said, noting core non-housing services has returned to a range consistent with 2% inflation. (See: MNI INTERVIEW: Fed Right To Remain Cautious On Rate Cuts-Kohn)