Boston Fed President Susan Collins signaled her support for holding interest rates steady for now, but stressed this stance depends on seeing more proof that inflation is cooling back toward the central bank's 2% target.

"Maintaining the current federal funds rate target range requires consistent evidence that inflation is indeed declining," Collins wrote in an essay published Tuesday by the Boston Fed. "If that evidence of sustained improvement fails to materialize, I believe it would be appropriate to tighten policy soon."

The next Federal Reserve policy meeting is scheduled for September 15-16 in Washington. Collins noted that recent inflation data, which reflects modest underlying price pressures, has been "somewhat encouraging," but she added that monthly figures can be volatile. "Whether this recent improvement can be sustained remains to be seen."

Fed officials held rates steady in July. However, three policymakers favored a quarter-point hike, highlighting deepening divisions among decision-makers on how to tackle persistently high inflation. Two additional non-voting officials also voiced support for a rate increase. Collins, who does not have a vote this year, said she backed the decision to hold rates unchanged in July.