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Fed split deepens as Collins says she would hesitate to support another cut
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Fed split deepens as Collins says she would hesitate to support another cut
Nov 12, 2025 4:21 PM

(Reuters) -Boston Federal Reserve President Susan Collins, who voted for both of the Fed's policy-rate reductions this year, said on Wednesday she sees a "relatively high bar" for additional easing in the near term, citing worries about elevated inflation.

"Absent evidence of a notable labor market deterioration, I would be hesitant to ease policy further, especially given the limited information on inflation due to the government shutdown," Collins said in remarks prepared for delivery to a bankers conference in Boston.

"It will likely be appropriate to keep policy rates at the current level for some time to balance the inflation and employment risks in this highly uncertain environment."

Her remarks underscore the deepening divisions at the Fed and the lack of consensus around another rate cut, challenges Fed Chair Jerome Powell flagged two weeks ago.

Despite "solid" support for the most recent interest-rate cut, Powell said, another reduction at the Fed's December meeting was "not a foregone conclusion, far from it."

Collins "has never dissented and has always been aligned with the center of the Committee so this seems significant," wrote III Capital Management's chief economist, Karim Basta. "January may well be more likely than December for the next move as it gives them time to look at more data."

The U.S. House on Wednesday was poised to vote to end the record-long shutdown, which has delayed the release of key economic data. The White House on Wednesday said October jobs and inflation reports might never be released.

October's quarter of a percentage point reduction in the policy rate range to 3.75%-4.00% drew two dissents, one from Kansas City Fed chief Jeffrey Schmid, who wanted to leave rates unchanged, and the other from Fed Governor Stephen Miran, who wanted a bigger half-point cut because he feels inflation is falling faster than is widely appreciated.

Since then a few others of the Fed's 12 voting rate-setters, like Collins on Wednesday, have signaled growing caution on rate cuts. They include St. Louis Fed President Alberto Musalem who worried about policy becoming too easy, and Fed Vice Chair Philip Jefferson who said proceeding slowly is particularly prudent given the lack of official data during the U.S. government shutdown.

Non-voting rate-setters including Atlanta Fed President Raphael Bostic have also expressed a preference for holding rates steady, given inflation risks, while others such as San Francisco Fed President Mary Daly call for being open-minded.

On Wednesday, Collins said she views short-term borrowing costs as "mildly restrictive" amid financial conditions that are a tailwind for economic growth. The labor market has clearly softened, she said, but downside risks have not worsened since the summer.

And while tariffs have pushed up inflation less than expected and their effect may abate in early 2026, she said, she is worried inflation that has run above the Fed's 2% target for nearly five years could remain elevated.

"It seems prudent to ensure that inflation is durably on a trajectory back to 2% before making any further adjustments to our policy stance," Collins said.

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