Yesterday, Boston Federal Reserve Bank President Susan Collins stated that she supports keeping interest rates at their current level amid still-strong economic growth, which could slow or halt progress in reducing inflation.

"It will likely be appropriate to maintain interest rates at their current level for some time to balance the risks of inflation and employment in this highly uncertain environment," Collins said Wednesday in prepared remarks at the bank's annual regional banking conference.

Her comments came at a time of increasing debate among Fed policymakers about how long to maintain current rates in order to achieve a sustained decline in inflation to the 2% target. Collins' statement, emphasizing the need for a cautious approach, reflects a widely shared view among several Fed officials concerned about the persistence of inflationary pressures. They fear that further monetary easing could reignite inflation, undermining the progress made in recent months. That, in turn, could require even more aggressive tightening later, posing significant risks to economic growth.

At the same time, advocates of a faster rate-cutting cycle point to slowing economic growth and signs of labor market weakness. They argue that keeping rates high for too long could trigger a recession, dealing a severe blow to the U.S. economy.

Thus, the Fed finds itself at a crossroads — balancing the need to contain inflation with the need to prevent an economic downturn. The decision to be made in December will have a substantial impact on the trajectory of U.S. economic growth and global financial markets. In this context, Susan Collins' remarks underscore that the Fed is maintaining a cautious stance, prioritizing inflation stability over the risks of premature policy easing.

Recently, an increasing number of Fed officials have indicated they will not support rate cuts, including Atlanta Fed President Raphael Bostic, who said earlier on Wednesday that inflation remains the most significant risk to the U.S. economy.

Although many market participants had expected a third consecutive rate cut at the Fed's December meeting, those expectations have diminished after Chair Jerome Powell warned investors that another cut in December is not guaranteed. This year's 0.5 percentage point rate reduction followed a full percentage point cut in the final months of 2024. Interest rates are now at or near a level some policymakers consider "neutral" — a rate that neither stimulates nor restrains the economy.

Collins noted that steady demand from households and businesses has offset the expected slowdown in economic activity due to higher tariffs. According to her, trade policy and its ultimate impact on prices remain uncertain, while financial conditions continue to support growth.

"Against this backdrop, providing additional monetary support for economic activity carries the risk of inflation returning to the target level," Collins said.

She added that the risks to employment appear not to have increased since the summer, and that the unemployment rate — which she expects to rise slightly — remains relatively low.

"This suggests that the labor market remains more or less balanced, though with an unusually low level of net hiring that bears watching."

The U.S. dollar chose not to react to all these statements.

Technical Outlook for EUR/USD

At present, buyers need to focus on reclaiming the 1.1605 level. Only then can they aim for a test of 1.1635. From there, the pair could climb toward 1.1668, although doing so without support from major players will be quite difficult. The furthest upside target remains the 1.1700 high. In case of a decline, significant buying activity is expected only around the 1.1570 level. If there is no reaction there, it would be reasonable to wait for a test of the 1.1540 low or consider opening long positions near 1.1520.

Technical Outlook for GBP/USD

Pound buyers need to break through the nearest resistance at 1.3130. Only then can they target 1.3181, above which it will be difficult to advance. The furthest upside target lies around 1.3215. In the event of a decline, the bears will attempt to regain control near 1.3100. If successful, a breakout below this range would deliver a serious blow to the bulls and push GBP/USD down to 1.3085, with potential further movement toward 1.3050.