Boston Federal Reserve president Susan Collins said that cutting interest rates a bit more may be appropriate due to diminished threats of higher inflation and risks that unemployment could rise.

“It may be appropriate to ease the policy rate a bit further this year, but the data will have to show that,” Collins said in a speech in New York at the Council on Foreign Relations.

She added, “I continue to see a modestly restrictive policy stance as appropriate, as monetary policymakers work to restore price stability while limiting the risks of further labor market weakening.”

Collins wasn't the only Fed official on Tuesday to express new concerns about unemployment. The Fed's vice chair, Philip Jefferson, said he sees downside risks to employment rising and said the unemployment rate could edge higher this year before moving back down next year.

“With the unemployment rate at 4.3 percent, the labor market is softening, which suggests that, left unsupported, it could experience stress,” Jefferson said in a speech in Finland.

Jefferson stopped short of telegraphing further cuts, saying only that he would evaluate the level of rates based on incoming data and that he he supported a 25-basis point rate cut at the Fed's last meeting on Sept. 17.

The rate debate within the Fed has only intensified in the weeks since that last meeting as policymakers go public with their views about the path ahead for monetary policy.

On Sept. 17, Fed policymakers offered a median estimate of two more cuts in 2025, although there was widespread divergence among the individual policymakers about those predictions. One Fed governor. Stephen Miran, disagreed with the quarter point cut, saying it should have been larger.

Miran has in the weeks since that meeting repeatedly called for deeper cuts, saying the Fed's current level poses risks to the US economy.

The economy added just 22,000 jobs in August as the unemployment rate rose to 4.3% from 4.2%.

Job growth for June was also revised into negative territory to -13,000 jobs, while July showed below-trend growth compared with the past year, marking three months of slowing job growth.

While payroll growth has been anemic, Collins said she doesn’t see the job market softening much further and anticipates hiring will pick up as companies adjust to the new tariff environment. But she notes there are risks that demand for workers may wane further, leading to what she called “a more meaningful and unwelcome increase in the unemployment rate.”

At the same time, while she expects inflation to remain elevated into next year, she sees it gradually returning to the Fed’s 2% target over the medium term.

“With less scope for inflationary pressures from the labor market, the upside inflation risks I was concerned about a few months ago are more limited,” she said.

Though, she added the caveat that in this “highly uncertain” environment, she won’t rule out scenarios featuring higher and more persistent inflation, more adverse labor market developments – or both.

Jefferson, the Fed's vice chair, noted that higher tariffs are showing through to higher inflation for some goods and expects that the effects of tariffs on inflation, employment, and economic activity will further show through in coming months.

Jefferson said he expects inflation to resume its downward trend after this year and return to the Fed's 2 percent target in the coming years.

But some Fed officials remain more concerned about the path of inflation. Cleveland Fed president Beth Hammack said Monday that “inflation is too high and moving in wrong direction.”

She pointed to core services inflation, which has ticked up in last couple months, noting that it’s hard to link that to the impact of tariffs.

At the same time, she said while she’s starting to see fragility in the job market with payrolls, she’s not seeing warn notices increase, which would signal that unemployment is about to increase quickly with layoffs.

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