Fed Official Sees Strong Economy as a Buffer Against Tariff Effects

Susan Collins, who leads the Federal Reserve Bank of Boston, thinks the economy is strong enough to handle tariffs without needing quick action from the Fed. She believes businesses and households are in good shape, which might help soften the blow of higher tariffs. This gives the Fed time to carefully watch how things unfold before making any moves on interest rates. Collins spoke at an event in Washington, saying the Fed can afford to be "actively patient. " This means they won't rush to cut interest rates just yet. The Fed has kept rates steady this year, waiting to see how President Trump's trade policies play out. Some officials think tariffs will push up inflation, but recent reports show mixed results.Consumer prices in June went up by less than expected for the fifth month in a row. However, tariffs are starting to affect some goods' prices. Collins pointed out that companies might shrink their profit margins, and consumers might keep spending even with higher prices. This could mean tariffs won't hurt jobs or economic growth as much as feared. The Boston Fed has a new way to track how tariffs affect prices. Collins expects inflation to be around 3% by the end of the year before it starts to drop again. In May, it was at 2. 7%.