By Michael S. Derby (Reuters) -Federal Reserve Bank of Boston President Susan Collins reiterated Tuesday that rising risks to the job market support additional central bank interest rate cuts in what remains an uncertain economic environment. “With inflation risks somewhat more contained, but greater downside risks to employment, it seems prudent to normalize policy a bit further this year to support the labor market,” Collins said in the text of a speech to be delivered before a gathering in Boston. Even with more rate cuts, “monetary policy would remain mildly restrictive, which is appropriate for ensuring that inflation resumes its decline once tariff effects filter through the economy,” Collins said. Collins’ comments on the economy and monetary policy come after the Fed cut its overnight interest rate target range by a quarter percentage point, to between 4% and 4.25%, last month. Officials penciled in 50 more basis points’ worth of cuts into the end of the year, as the Fed seeks to help buoy the job market while still dealing with inflation that’s well above the 2% target. Collins cautioned in her remarks that the future remains unclear, noting “policy is not on a pre-set path, and I can envision scenarios where appropriate policy calls for holding rates steady later this year and into next, as we assess effects of the recent policy actions and get more information.” The official said that looking ahead, her economic outlook is “relatively benign” with continued activity gains, a small rise in unemployment joined with elevated inflation that eases next year as tariff impacts are passed through the economy. But Collins cautioned that “I do not rule out scenarios featuring higher and more persistent inflation, more adverse labor market developments, or both.” (Reporting by Michael S. Derby; Editing by Chizu Nomiyama)
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