Fed’s Collins Says It’s Prudent to Ease a Bit More in 2025

Core Viewpoint - The Federal Reserve Bank of Boston President Susan Collins advocates for continued interest rate cuts this year to bolster the labor market while ensuring inflation remains controlled [1][2]. Interest Rate Policy - Collins suggests that even with additional easing, monetary policy would still be mildly restrictive, which is necessary for inflation to decline as tariff effects dissipate [2]. - Investors are anticipating a rate cut at the upcoming Federal Reserve meeting, marking the second reduction of the year after a quarter-point cut in September, bringing the target range to 4% to 4.25% [3]. Labor Market Insights - Collins notes the difficulty in determining whether the recent decline in hiring is due to reduced labor demand or a decrease in worker supply, particularly from slowed immigration [4]. - The monthly job growth required to maintain a stable unemployment rate is now estimated at 40,000, down from 80,000 pre-pandemic levels [4]. - A modest increase in the unemployment rate is expected this year and early 2026, but hiring is anticipated to improve as uncertainties regarding tariffs and the economy diminish [5]. Future Rate Outlook - Collins emphasizes that the policy path is not predetermined, indicating a possibility of holding interest rates steady after further easing, potentially by another 25 basis points [7].