Patience Key in Fed's Policy Adjustments

During the "Perspectives on the US Economy" event, Susan Collins, President of the Federal Reserve Bank of Boston, highlighted the importance of a cautious approach towards monetary policy. Collins emphasized that the Federal Reserve's current outlook is in line with December's forecasts, advocating for a gradual approach in tackling inflation and rate changes.

Inflation and Labor Market Resilience

Collins pointed out that while the labor market remains resilient, inflation has proven to be more persistent than expected. She anticipates that inflation in 2025 will exceed earlier projections, with the risks now leaning upward. Despite these challenges, Collins believes the Fed's policy is well-positioned to adapt as needed, whether by maintaining current rates or easing them earlier if the situation demands.

Adapting to Future Policy Changes

"Inflation, while closer to the 2 percent target, has been stickier than anticipated," Collins stated. She also noted the uncertainty surrounding how future policy changes by the new administration and Congress might impact inflation and economic activity. Collins stressed the importance of being prepared to adjust policies in response to these evolving conditions.