Fed's Collins Says Further 2025 Easing May Be Appropriate

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00:00Economic growth remains resilient, but the labor market has softened,

00:04and inflation has been above target for more than four years.

00:08Although it's well down from the earlier peaks, it's picked up recently.

00:13So a context with softening labor market combined with inflationary pressures,

00:18that's a challenging one for monetary policymakers.

00:21And at the September meeting of the Federal Open Market Committee, or the FOMC,

00:26I supported the 25 basis point policy rate reduction.

00:31In my view, a bit of easing was appropriate to address the recent shift in the balance of risks

00:37to our inflation and our employment mandate.

00:40And obviously, I'll talk a little bit more about that.

00:42But I do continue to see a modestly restrictive policy stance as appropriate,

00:49as we as monetary policymakers work to restore price stability

00:53while limiting the risks of further labor market weakening.

00:57So as I look ahead, my baseline outlook continues to be relatively benign.

01:03I anticipate that hiring will pick up as firms adjust to this new tariff environment.

01:08And while inflation is likely to remain elevated into next year,

01:13I expect it will resume its gradual return to target over the medium term.

01:17That outlook is similar to the median forecast in the September SEP,

01:22which is the summary of economic projections.

01:25But it's a highly uncertain environment.

01:27And in that context, I don't rule out scenarios that could feature higher and more persistent inflation,

01:34could feature more adverse labor market developments, or both.

01:38But still, with less scope for inflationary pressures from the labor market,

01:43the upside inflation risks that I was concerned about a few months ago are more limited.

01:49So in this context, it may be appropriate to ease the policy rate a bit further this year.

01:54But we'll have to wait to see the data.

01:57The data will have to show us appropriate policy.