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Fed's Collins: May be appropriate to cut rates again if data supports easing

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Fed's Collins: May be appropriate to cut rates again if data supports easing

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New update 2025.09.30 22:06
Fed's Collins: May be appropriate to cut rates again if data supports easing

update 2025.09.30 22:06

Federal Reserve Bank of Boston President Susan Collins said on Tuesday that the current "modestly restrictive" monetary policy is appropriate due to inflation, per Reuters.

Key takeaways

"It may be appropriate to cut rates again if data supports easing."

"Supported recent Fed rate cut, given risks to Fed mandates."

"While inflation threat remains, upside risks to price pressures have waned."

"Can't rule out worse outlooks for inflation, job market."

"Baseline outlook is relatively benign."

"Expecting hiring to rebound onces firms acclimate to tariffs."

"Inflation elevated into next year, then should ease."

"Risk labor demand could ebb and push up unemployment."

"Economic growth has been resilient amid a softer job market."

Market reaction

These comments received a neutral score of 5.4 from FXStreet Fed Speech Tracker. Meanwhile, the US Dollar Index was last seen trading marginally lower on the day at 97.85.

Fed FAQs

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed's 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials - the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed's weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.


Date

Created

 : 2025.09.30

Update

Last updated

 : 2025.09.30

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