Federal Reserve’s Collins warns of persistent inflation risks above 2%

Boston Federal Reserve President Susan Collins is sounding the alarm on inflation’s staying power. In her latest remarks, Collins said the probability of inflation remaining above the Fed’s 2% target in future scenarios has increased, a blunt assessment that underscores just how stubborn the price problem has become. Collins backed the Fed’s recent quarter-point rate hike, which brought the benchmark interest rate to approximately 3.9%. The move reflects a central bank still in fighting mode more than five years after inflation first blew past its target and never really came back down. Why inflation won’t quit The culprits, according to Collins, are a cocktail of supply shocks and resilient demand. Geopolitical tensions in the Middle East, particularly renewed conflict involving Iran that escalated in August 2026, have put upward pressure on energy prices. Strong consumer spending continues to provide a floor under prices. Collins has been consistent on this point throughout 2026, having previously warned that further rate increases might be necessary if disinflation efforts stalled. The Fed’s tightening calculus It’s worth noting that Collins doesn’t hold a voting seat on the Fed...