Fed official Susan Collins turns hawkish: Inflation may not cool down until 2027, and "restarting rate hikes" is not off the table if conditions worsen.

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The dream of rate cuts is shattered! Boston Fed President Susan Collins has turned hawkish in her latest remarks, warning that U.S. inflation may not see a substantial cooling until 2027. Facing energy shocks triggered by the conflict in the Middle East, she emphasized that the Fed will not only keep rates "Higher for Longer," but also does not rule out the possibility of resuming rate hikes if inflation continues to resurge. (Previous coverage: Bitcoin falls below $79,000, Ethereum dips to $2,230! "U.S. inflation panic spreads," with $380 million liquidated across the network in 24 hours) (Background: Inflation bomb explodes! U.S. April PPI surges 6% year-on-year, the largest increase in nearly three years; the Fed's rate cut dream may be completely shattered) After U.S. April CPI and PPI data both exceeded expectations, the attitude of Fed officials is shifting toward a hawkish stance at a visible speed. Boston Fed President Susan Collins recently shared her latest views on the current macroeconomic situation. She made no secret of her concerns about the resurgence of the inflation monster and poured cold water on the market's expectations for rate cuts. FED’S COLLINS: INFLATION RISKS KEEP POLICY RESTRICTIVE Boston Fed President Susan Collins said current policy is “well positioned,” but emphasized rates may need to stay restrictive for an extended period—and could even rise if inflation persists. She warned that inflation… — *Walter Bloomberg (@DeItaone) May 13, 2026 High rates to be maintained longer, "resuming rate hikes" not ruled out In her remarks, Collins set the tone that current monetary policy is "well positioned." However, she immediately dropped a bombshell, emphasizing that to suppress prices, interest rates may need to remain at restrictive levels for an extended period: "If inflation continues to show stickiness, we may even need to raise rates." This statement has been widely interpreted by Wall Street and the cryptocurrency market as a strong "Higher for Longer" signal. With inflation remaining the Fed's primary focus, policymakers will not allow premature easing to lead to a price spiral. Middle East energy shock a pain point, inflation to cool only in 2027? Speaking on the core culprit behind the reignition of inflation, Collins pointed to geopolitical turmoil. She noted that the energy shocks brought about by ongoing tensions and conflicts in the Middle East are making inflation expectations increasingly difficult to stabilize: - Dual risk squeeze: Prolonged conflict will simultaneously push up "inflation risks" and threaten "economic growth," putting the Fed's policy decision-making into an extremely difficult dilemma. - Economic resilience: However, she also added reassurance to the market, noting that compared to past historical crises, the U.S. economy currently possesses greater resilience to withstand fluctuations in energy prices. Regarding the rate cut timeline that the market cares about most, although Collins stated that she believes "there is still room for rate cuts in the future," she provided a desperate timeframe: it is unlikely that inflation will see significant relief this year (2026), and it may not be until 2027 that a meaningful cooling occurs. This hawkish rhetoric undoubtedly deals another blow to risk assets already in deep water. With optimistic expectations for rate cuts this year almost completely shattered, investors must be fully prepared for a longer winter of monetary tightening.

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