Boston Fed’s Collins says another rate hike may be needed before year-end

Federal Reserve Bank of Boston President Susan Collins said the Fed may need to raise interest rates modestly once more before the end of this year to keep inflation moving sustainably toward its 2% target. The Fed raised rates by 0.25 percentage points last month, bringing the policy rate to 3.75%–4.00%. She said whether to take further action, and when, will depend heavily on incoming economic data. She expects both headline and core inflation to remain above 2% over the next few months, and noted that investment in AI infrastructure, tariffs, and higher energy costs driven by the war in the Middle East could make it harder to bring inflation down.