Fed's Collins: Another 25 basis point rate cut may be appropriate

Fed Chairwoman Collins called for further rate cuts this year, citing growing concerns about a weakening labor market. "With inflation risks somewhat contained, but employment facing greater downside risks, further modest policy normalization this year to support the labor market appears prudent," Collins said. She added that even with further rate cuts, monetary policy would remain moderately tight, "appropriate to ensure that inflation resumes its downward trend as the tariff effects gradually feed through to the economy." Collins emphasized that both short-term and long-term inflation indicators are currently relatively stable. She said the greater concern lies in the labor market: "The labor market has cooled to a peculiar equilibrium—both hiring and layoffs are low, and the unemployment rate remains low. Further weakening would create unwelcome slack, making the economy more vulnerable to adverse shocks and potentially triggering more adverse dynamics." She also suggested that another 25 basis point rate cut might be appropriate.