Susan Collins, the president of the Federal Reserve Bank of Boston and a voting member of the Federal Open Market Committee (FOMC) in December, expressed opposition to further rate cuts. According to CNBC on the 12th (local time), Collins stated in a public speech at a regional bank conference in Boston that it seems appropriate to maintain the current level of the benchmark interest rate for the time being.
Although Collins supported a 0.25% rate cut at the FOMC last month, she essentially expressed her opposition to a December rate cut. While she acknowledged that the current monetary policy is somewhat tight, she noted that broader financial conditions are acting as a tailwind rather than a headwind to economic growth. She argued that further rate cuts under these circumstances could prevent returning inflation to its target level.
On the other hand, Steven Meier, a Federal Reserve (Fed) governor known as a “Trump economic adviser,” maintains that the pace of rate cuts should be accelerated. He advocated for a 0.50% rate cut during last month’s FOMC meeting.
Federal Reserve Chairman Jerome Powell, after the November FOMC meeting, emphasized that a December rate cut is not a foregone conclusion, indicating differences in views among members. The Wall Street Journal (WSJ) reported that the differences in perspective among Fed members have become the most pronounced during Powell’s tenure.
The financial markets also seem unable to present a clear outlook on the Fed’s decision in the December meeting. According to the Chicago Mercantile Exchange’s (CME) FedWatch tool as of the 12th, the probability of a 0.25% rate cut in the December FOMC meeting is reflected at 60%, and the probability of maintaining the current rate is reflected at 40% in the interest rate futures market.