MNI BRIEF: Fed Will Cut Rates Before Inflation Hits 2%-Collins

Federal Reserve Bank of Boston President Susan Collins on Wednesday said waiting until 12-month inflation hits 2% for the central bank to begin cutting interest rates would be waiting too long.

"I totally agree that if we were to wait until we were all the way there, so that our 12 month measure of inflation's all the way back to 2%, that's waiting too long," she said in Q&A at a Boston Economic Club event. "That certainly is not my expectation of what I'm looking for. When I say more confidence, I'm talking about confidence that the trajectory [of inflation] will continue to bring us back down to price stability over time." Collins said there are still risks that inflation stalls at a level above the Fed's 2% goal.

The comments from the Boston Fed chief echo those from Chair Jay Powell who recently said the Fed wouldn't wait for inflation to get to 2% to cut rates. (See: MNI INTERVIEW: Fed Could Cut When Core PCE Reaches About 2.8%)