Federal Reserve Poised to Act if Markets Falter, Says Boston Fed President Collins

Boston Federal Reserve President Susan Collins has assured that the U.S. central bank is fully prepared to intervene in financial markets if conditions worsen. In recent remarks, Collins emphasized the Fed’s commitment to safeguarding financial stability, stating, “We would absolutely be prepared” to step in if the need arises. For now, however, she noted that markets are functioning efficiently, and there is currently no significant sign of stress or liquidity crunch.

Her comments come amid heightened market volatility triggered by a new wave of protectionist trade policies, particularly the Trump administration’s recently announced tariffs. Collins cautioned that these measures are likely to push inflation above the 3% mark in the near term, while also putting a damper on economic growth. This dual effect—higher prices and slower output—places the Fed in a delicate position as it considers its next moves on monetary policy.

Collins also warned that the impact of the tariffs will likely extend far beyond consumer goods. Many of the affected items are intermediate inputs used by U.S. manufacturers and producers, meaning higher production costs could ripple throughout the supply chain. This broader economic disruption could strain both business and household budgets, further challenging the Fed’s efforts to stabilize inflation while preserving economic momentum.

Despite these concerns, Collins struck a cautiously optimistic tone about the overall health of the economy. She acknowledged that a slowdown in growth is likely, but does not foresee a severe downturn at this point. The Federal Reserve, she stressed, will continue to monitor evolving data closely and remains ready to act decisively if financial market disruptions pose a greater risk to economic stability. In the meantime, the focus remains on maintaining a careful balance between inflation control and supporting continued employment and output.