Fed's Collins: Prudent to normalize policy a bit further

Core Viewpoint - Boston Fed President Susan Collins emphasizes the need for further normalization of monetary policy while maintaining a mildly restrictive stance despite potential rate cuts [1][2]. Economic Outlook - Collins identifies inflation as primarily influenced by tariffs and expresses confidence in solid growth despite challenges posed by these tariffs and uncertainty [2]. - There are concerns regarding a broad-based slowdown in hiring, which raises risks of a significant drop in labor demand and has been accompanied by notable declines in job gains and a rise in unemployment [2]. Market Expectations - The market has fully priced in two rate cuts following dovish comments from the Fed Chair regarding the outlook for interest rates and the balance sheet [3]. - There is currently a 51% probability of a third continuous rate cut anticipated in January, indicating fluctuating market sentiment on this issue [3].