Fed’s Collins Signals Further Rate Hikes by Year-End Amid Persistent Inflation Concerns
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- Boston Fed President Collins signals more rate hikes by year-end.
- Inflation expected to stay above 2% due to energy and AI.
- Market leans towards December quarter-point hike, supporting USD.
Boston Federal Reserve President Susan Collins indicated that interest rates will likely need to rise further before the end of the year to curb persistent inflation. Speaking at a banking conference, Collins emphasized that inflation remains the Federal Reserve’s primary concern, expecting it to stay above 2% due to factors like elevated energy prices and the impact of AI data-center buildout. Her remarks reinforced market expectations for another quarter-point rate increase, with commentary leaning towards a December hike rather than an earlier one. Collins highlighted the importance of watching the breadth of inflation pressures, including core and services prices, noting that sustained strength in crude and refined products could feed directly into future rate hike expectations. This outlook is seen as supporting front-end Treasury yields and limiting a sustained US Dollar pullback, though elevated uncertainty means future policy remains data-dependent.