More from Fed's Paulson, says risks are super-elevated and hike on table if growth surges

Paulson says current Fed policy appropriate but markets right to price in hikes

Feds Collins:It’s possible the Fed will need to hike rates to cool inflation pressures

The desk interprets recent comments from Fed Governor Susan Collins as indicative of a more hawkish stance regarding interest rates, emphasizing the need for sustained restrictive policy to combat persistent inflation pressures. Per the full note [source], Collins highlighted that the Fed may need to hike rates further to achieve its 2% inflation target, particularly in light of ongoing geopolitical tensions that could exacerbate inflation. This aligns with our view that the Fed is unlikely to pivot towards rate cuts in the near term, despite hopes for easing later this year. The broader market consensus appears to be split, with some firms anticipating a more dovish approach as inflationary pressures potentially cool in the coming months.

Citadel Securities warns Fed risks falling behind curve as inflation threat grows

ICYMI - Boston Fed's Collins raises prospect of rate hikes if inflation broadens

The desk interprets Boston Fed President Susan Collins' recent comments as a significant signal that the Federal Reserve may need to consider rate hikes if inflationary pressures broaden. Per the full note [source], Collins highlighted rising inflation expectations and the impact of tariff pass-through as critical factors that could necessitate a shift in monetary policy. This perspective aligns with the growing concern that inflation could persist longer than initially anticipated, particularly as household and business inflation expectations have reached the upper end of their historical ranges. The desk notes that Collins' call for a more neutral stance in Fed communications could lead to a reassessment of rate-cut timelines currently priced into the market, which could have broader implications for risk assets and the dollar.