Right now Fed policy well positioned to deal with risksExpects Fed will need to keep restrictive policy for some timeIt’s possible US central bank will need to hike interest rates to cool inflation pressuresEssential for Fed to do what’s needed to get inflation to 2%Hopes economy will allow for more rate cuts later this yearProlonged Middle East war creates challenging policy choicesQuick end to war would mean resilient demand, some rise in unemploymentInflation persistence makes it harder to look through energy shockEnergy shock creates downside growth risks, upside inflation riskIt is critical that inflation expectations stay anchoredInflation will not abate this year, could cool in 2027Most worried about inflation outlook right nowThe longer the war goes on, the greater the inflation impactUS is more insulated against energy shocks than in the pastCollins is not a voting member on the FOMC board this year.Collins’ comments lean more hawkish overall. While she still expressed hope for additional rate cuts later this year, the broader message focused on persistent inflation risks, the possibility of renewed rate hikes, and the need to keep policy restrictive for an extended period. Her concern that inflation may not cool meaningfully until 2027, combined with warnings that a prolonged Middle East conflict could worsen inflation pressures while slowing growth, suggests the Fed remains highly cautious about easing policy too quickly. This article was written by Greg Michalowski at investinglive.com.