Fed's Collins Says Rate Increase Warranted If Inflation Disappoints -- WSJ

By Nick Timiraos

JACKSON HOLE, Wyo.-A Federal Reserve official who has spent months in the committee's cautious center said she could support raising interest rates at an upcoming meeting if incoming data show inflation isn't declining in line with her expectations.

"I am open to supporting an increase if I see conditions as not providing that evidence of continued disinflation that I'm looking for," Boston Fed President Susan Collins said in an interview on the sidelines of the Kansas City Fed's annual symposium in Wyoming.

Collins said Wednesday's inflation report on July prices was broadly in line with her outlook though core inflation, which removes food and energy prices, came in higher than she had expected.

She pointed to an even narrower measure that excludes prices that can't be directly observed as "more promising." She said those excluded prices drove the firmer-than-anticipated core reading and the Commerce Department is preparing to measure them differently.

Collins, who doesn't vote on rate decisions this year but participates in the Fed's policy deliberations, wrote this week that it would be appropriate to tighten policy "soon" without evidence of sustained progress on inflation. Asked whether that meant within a meeting or two, she said, "Could be, yes."

Her comments reflected a tension the central bank has been wrestling since the spring, when the Iran war sent energy prices climbing. Inflation has been running above the Fed's 2% goal for more than five years, and officials have consistently pushed back the timeline for getting it down.

But many officials, Collins included, still expect inflation to grind lower without a rate increase. She said her most recent projection in June showed rates on hold through year-end, and she wouldn't say whether she would pencil in an increase when officials update those projections at the September meeting.

Collins said the housing market and tight credit conditions for the small and midsize businesses that make up a large share of the New England economy offer evidence that the Fed's rate setting, currently around 3.6%, is "mildly restrictive."

The Fed held rates steady at its meeting last month. Investors in interest-rate futures markets see a roughly one-in-three chance of an increase next month.

Write to Nick Timiraos at Nick.Timiraos@wsj.com

(END) Dow Jones Newswires

August 27, 2026 14:05 ET (18:05 GMT)