Fed Officials Signal Possible Year-End Rate Hike, Faster Treasury Clearing Shift

Boston Fed President Susan Collins and New York Fed President John Williams on Tuesday signaled support for further monetary tightening and faster reform of the U.S. Treasury market. Collins backed the Fed's quarter-point rate hike last week and said another increase is likely before year-end, citing inflation that has exceeded the 2% target for five and a half years. The Fed unanimously raised its benchmark rate by 25 basis points, its first hike since 2023. Updated projections show 16 officials expect at least one more increase this year. Collins, who lacks a policy vote in 2026, said she expects rates to remain unchanged in 2027. Chair Kevin Warsh said the hike removes "some accommodation" from the economy. Williams, addressing Treasury market structure, said central clearing of Treasury cash and repo trades is progressing faster than scheduled. Eligible secondary-market and repo transactions must clear through a central counterparty to reduce counterparty risk. He reiterated the Fed's commitment to an ample, flexible supply of bank reserves.