(Aug 22): Federal Reserve Bank of Boston president Susan Collins said it will soon be appropriate to begin cutting interest rates to help preserve a still-healthy labour market.

Officials should move gradually when they begin easing, Collins said, emphasising she’s not seeing any “big red flags” in the economy. The Boston Fed chief said she’s focused both on “preserving that healthy labour market while we continue to bring inflation down.”

“That’s the context in which I do see it soon being appropriate to begin easing policy,” Collins said on Thursday in an interview with Bloomberg News in Jackson Hole, Wyoming, ahead of the Kansas City Fed’s annual symposium.

Recent data show an economy that’s still in a good place overall, Collins said. Inflation has come down significantly and data is providing more confidence that price growth is on a path to the Fed’s 2% goal, she said. 

And while the unemployment rate is rising — hitting 4.3% in July — it’s still historically low, and labour force participation has been strong. Hiring has slowed, but layoffs haven’t climbed, painting a picture of a labour market that has been cooling in an orderly way, Collins said. 

“I do think that recalibrating begins to be important, but I would envision doing that gradually,” Collins said, adding, “There isn’t a pre-set path.” 

Minutes from the central bank’s July 30-31 policy meeting released on Wednesday revealed that “several” Fed officials saw a plausible case for cutting rates last month while a “vast majority” thought it would be appropriate to begin easing at their next gathering on Sept 17-18. 

Investors will be listening closely for any hints about how quickly policymakers expect to move when Fed chair Jerome Powell speaks on Friday.

Economic data is pointing to an “orderly rebalancing — consistent with growth that is near trend and a healthy labour market, with inflation coming down,” Collins said. “That’s a reasonably good place to be. Let’s do our best to keep it there.”

Collins doesn’t vote on monetary policy decisions this year but will be a voter next year.

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