Boston Fed President Susan Collins stated on Friday that she does not see an urgent need to adjust interest rates at present, adding that the outlook for monetary policy easing depends on whether inflation can further decline toward the 2% target level.

In prepared remarks for an event in Springfield, Massachusetts, Collins noted, "Based on my outlook, I believe a patient and cautious approach is appropriate," and "I see no need to rush into additional policy adjustments."

She emphasized, "My baseline assessment is that the inflation outlook remains uncertain, with persistent upside risks. In my view, this, combined with recent data showing relative stability in the labor market, suggests that policy rates should remain at their current moderately restrictive level for some time."

Collins indicated that before she would support easing the current federal funds target rate range of 3.5% to 3.75%, she would need clear evidence that inflation, which remains elevated, is returning to the target level—something that "may not materialize until the second half of this year."

She pointed out that in her outlook, "considerable uncertainty remains in the economy, recently heightened by geopolitical tensions such as the conflict in the Middle East." Nonetheless, she added, "My baseline outlook remains moderately positive—economic growth will continue at a solid pace, labor market conditions will stay relatively balanced, and as tariff effects fade, the process of slowing inflation will resume later this year."

Regarding the job market, Collins suggested that artificial intelligence could influence hiring patterns, explaining, "Although hiring activity may pick up from last year’s subdued levels, employment growth is likely to remain modest."

On the same day Collins delivered her remarks, government data showed an unexpected decline in February employment, which may signal further weakening in the labor market. The Fed reduced its interest rate target by 75 basis points last year to support a softening employment sector, though analysts remain uncertain whether the current weakness is due to temporary factors or the beginning of a more persistent trend.

The Fed also faces additional challenges from surging energy prices linked to U.S. and Israeli tensions with Iran. Rising gasoline prices could further push up inflation and unsettle inflation expectations, complicating any potential interest rate cuts aimed at stabilizing the labor market.

It is widely anticipated that the Fed will keep interest rates unchanged at the March 17–18 Federal Open Market Committee meeting, while markets still expect several rate cuts later this year.