Susan Collins, president of the Boston Federal Reserve, said on Tuesday that the central bank may need to raise interest rates again before year-end as inflation remains above target.

Collins Flags Inflationary Risks

Speaking at the 25th Annual Regional and Community Bankers Conference, Collins said it would be “appropriate” to raise rates “a bit further” before year-end to return inflation to the Fed’s 2% target.

“However, my view will depend on how the totality of incoming data shapes my outlook and the associated balance of risks,” the economist added.

Notably, Collins, who sits on the Federal Open Market Committee, supported last month’s decision to raise the federal funds rate by 25 basis points to 3.75%-4.00%.

Collins said her “modal outlook” is healthy GDP growth and a labor market near full employment, though she flagged inflation risks from stronger-than-expected AI-related demand and high energy prices.

What Do Punters Think?

The odds of Kevin Warsh-led Fed enacting one more rate hike before year-end stood at 80% on Polygon (CRYPTO: POL)-based Polymarket.

Source: Polymarket

Similarly, bettors on Kalshi priced in a 75% chance that the central bank would hike rates by 25 basis points in December, up from 58% a month ago.

Notably, CME FedWatch data showed only a 21% probability that rates would be hiked at the October meeting, while the odds for December were higher at 71%.