Boston Fed President Collins: Gradual rate hikes are appropriate; a stable labor market has not pushed up prices.

According to Zhihui Finance APP, Boston Fed President Susan Collins stated that, with the labor market stabilizing and not putting additional pressure on prices, a gradual pace of rate hikes would be an appropriate path to reduce inflation.

“I am seeing price pressures spreading, and they have remained elevated for a long time,” Collins told reporters in Boston on Saturday. “For now, a steady and gradual path seems appropriate to me, but I remain open minded.”

She reiterated that the direction of monetary policy is clear, but again refused to signal the speed and magnitude of Fed rate hikes. Just last Friday, the Boston Fed President said that some additional tightening was needed “as soon as possible.”

Last month, Fed officials held rates steady in the 3.75%-4.00% range. Currently, they appear ready to raise rates again at their next meeting in Washington scheduled for early December. According to federal funds futures pricing, investors expect rate hikes in both December and January, with a third move taking place in March or April.

Collins is not a voting member of monetary policy this year.

Collins noted that consumers' expectations for future inflation remain broadly anchored around the Fed’s 2% target, while wage increases are concentrated in pockets of the labor market—especially positions related to high-skilled workers.

“My most likely scenario is that healthy consumer demand and business investment continue, and that with a slightly tighter policy path, we can bring inflation down within a reasonable time, without major changes in the labor market,” she said on Saturday.

However, she also outlined risk scenarios: if demand pressures are more severe, wage gains broaden, or the economy is hit by additional shocks, inflation could be higher than expected. She also said she is watching the rise in commodity prices—“they have already gone up a bit.”

“I also recognize that we still face ongoing uncertainties, and there is a scenario where inflation could be more persistent,” Collins said.

In recent remarks, policymakers have differed over the pace and size of rate hikes: some officials advocate for gradual increases, while others have signaled the need for faster action. Board member Christopher Waller has even advocated for a 50 basis point rate hike in one move.