Susan Collins, President of the Federal Reserve Bank of Boston, emphasizes a cautious and gradual approach to rate cuts amid economic uncertainties. She notes that while the economy is generally in a good state and policies are nearing neutrality, the unexpected nature of future economic conditions warrants a measured approach in rate adjustments.

Inflation has significantly decreased from its peak in 2022, but the Fed’s 2% target is still a work in progress. The labor market remains strong, but financial markets are uncertain about further rate cuts, especially with the potential for future policy changes under the Trump administration that may impact inflation and economic activities.