Fed's Collins Eyes About Two Rate Cuts This Year

Federal Reserve Bank of Boston President Susan Collins is eyeing a couple of interest rate cuts this year amid expectations that it could still take some time to get inflation back to targeted levels, according to Michael S. Derby's report for Reuters.

Collins' remarks followed a speech in which she said the Fed is likely to cut its policy rate at some point this year, but uncertainties and risks around inflation mean that the Fed needs to take its time before doing so. I Photo: Ford School of Public Policy - University of Michigan

“I am still expecting that we're going to see some slowing in demand start and continue into 2024, and that will help to bring inflation down later in the year,” Collins said in an interview with Reuters.

Her remarks followed a speech in which she said the Fed is likely to cut its policy rate at some point this year, but uncertainties and risks around inflation mean that the Fed needs to take its time before doing so.

She added that the strength of the job market and the broader economy allow time for that patience.

Regarding the number of rate cuts the central bank is likely to deliver, Collins told Reuters she was “in the range of two,” referencing the quarterly forecast she submitted for the Fed's meeting in March.

The median estimate among policymaker projections released in both March and December was for three cuts totaling 75 basis points in 2024, an amount Collins had said in a SiriusXM Radio interview in February was "similar" to her baseline expectation.