S&P 500 falls on pressure from retail stocks, weak jobless claims
Investing.com -- Federal Reserve Bank of Boston President and CEO, Susan Collins, has expressed a cautiously optimistic outlook on the economy. Despite the optimism, she anticipates that tariffs will inevitably lead to an increase in inflation in the near term. Collins suggests that it would be appropriate to maintain the current interest rates for an extended period.
As 2025 began, the economy was in a strong position. Although inflation had reduced, it remained relatively high at the start of the year. Now, the future of both inflation and economic growth appears less clear. Collins stated that inflation risks are leaning towards the higher side, and it remains uncertain how long the tariff-induced inflation will persist.
Supporting the Federal Reserve’s decision to keep rates steady, Collins expects this policy to continue for a longer period due to the current economic outlook. She believes that the base scenario is a one-off tariff impact on inflation. However, if tariffs continue to be imposed, it could result in a different price trajectory.
Collins emphasized the importance of monitoring inflation expectations, particularly in the context of increasing tariffs. She also noted that federal layoffs remain relatively small compared to the overall size of the labor market.
She acknowledged that economic uncertainty can lead businesses to hold back. While it’s premature to determine if economic data is weakening, Collins reassured that the underlying strengths of the economy are still present.
In terms of the Federal Reserve’s policy, Collins advocates for an approach that is both patient and flexible. She stressed the need to avoid lagging behind the curve, while also avoiding overreactions.
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