Fed's Collins sees another rate hike on the table before end of 2026

She emphasized that her view on future policy actions and their timing would depend on incoming economic data and the associated risks. Collins expressed optimism about the economy and job market, suggesting the Fed can focus on its inflation goal after exceeding it for over five years. The Fed's policy rate was increased by a quarter of a percentage point to the 3.75%-4.00% range last month.

While policymakers' projections released after that meeting indicated another increase by the end of 2026, several Fed officials have recently suggested the move is more likely in December rather than at the upcoming October 27-28 meeting. Collins acknowledged risks to the economic outlook, noting that the "most likely" path involves continued GDP growth and a strong labor market, leading to inflation gradually returning to 2% as efficiency gains support demand and supply balance.

However, she cautioned that pressures from investments in AI infrastructure, tariffs, and energy costs stemming from the Middle East conflict could hinder efforts to lower inflation. Collins expects both total and core inflation to exceed the Fed's 2% target in the coming months, citing recent increases in prices for refined energy products like jet fuel, diesel, and home heating oil.