Boston Fed president: “Another rate hike this year is appropriate ... watching for upside price pressures”

[The Financial News] Susan Collins, president of the Federal Reserve Bank of Boston (Boston Fed), signaled support for raising the benchmark interest rate one more time this year to bring inflation under control.
On the 13th (local time), Yahoo Finance reported that Collins said in a speech in Boston, U.S., “I believe it would be appropriate to raise rates a little further before the end of the year so that inflation can return to the Federal Open Market Committee (FOMC)’s 2% target in a timely and sustainable manner.”
Collins added a note of caution, saying, “Views on the need for additional policy action and the appropriate timing will depend greatly on how the full set of incoming data affects the economic outlook and the balance of risks.”
Collins noted that the annualized three-month core personal consumption expenditures (PCE) price index, excluding volatile food and energy prices, stood at just 2%. However, with prices of refined energy products such as jet fuel, diesel and heating oil surging recently, she forecast that headline and core inflation would rise above the Fed’s 2% target again over the next few months.
She said rising prices for materials used to build data centers, as well as in related services sectors such as transportation and lodging, where energy is a major input, would keep inflationary pressures elevated.
She stressed, “Against this backdrop, it is important to watch whether price increases in other sectors continue to moderate while inflation’s upward trend remains confined to energy and categories related to building artificial intelligence (AI) infrastructure, or whether price pressures spread broadly to other sectors.”
The remarks came ahead of the September Consumer Price Index (CPI) data, due out on the 14th. Market experts expect September CPI to have risen 3.6% from a year earlier, while core CPI, excluding food and energy, is forecast to have risen 2.5% year-on-year and 0.2% month-on-month. CPI rose 3.4% in August.
Meanwhile, on the same day, New York Fed President John Williams also reiterated in an interview that he considers one additional rate hike this year appropriate. However, he added that, for now, he does not think the Fed will need to raise rates again in 2027.
Financial markets currently expect the Fed to leave rates unchanged at its monetary policy meeting (FOMC meeting) at the end of this month, then raise them again at its meeting in December.
[email protected] Yoon Jae-jun Reporter