Fed's Collins Signals Hawkish Stance Amid Data Blackout and Policy Uncertainty

This analysis is based on the Wall Street Journal report [5] published on November 12, 2025, covering Boston Federal Reserve President Susan Collins’ remarks on monetary policy at the 24th Annual Regional & Community Bankers Conference in Boston.

Collins, a voting FOMC member who supported the October quarter-point rate cut, signaled a hawkish shift by stating there’s a “relatively high bar” for additional rate cuts and that it will “likely be appropriate to keep policy rates at the current level for some time” [1][3]. Her stance reflects concerns about elevated inflation that has run above the Fed’s 2% target for nearly five years, combined with limited economic data due to the federal government shutdown [3][4].

The market reaction on November 12, 2025, revealed sector-specific responses to this policy uncertainty [0]:

• Major Indices
  : S&P 500 declined 0.25% to 6,850.92, NASDAQ fell 0.67% to 23,406.46, while Dow Jones Industrial Average bucked the trend with a 0.50% gain to 48,254.82
• Sector Performance
  : Communication Services (+1.38%), Basic Materials (+0.61%), and Healthcare (+0.36%) outperformed, while Technology (-0.81%), Energy (-1.22%), and Real Estate (-0.61%) underperformed
• Treasury Market
  : 10-year Treasury yield fell 6 basis points to 4.06%, suggesting some investors still anticipate potential rate cuts despite Collins’ hawkish stance

The timing of Collins’ remarks is particularly significant due to the ongoing federal government shutdown, which has prevented the release of crucial October economic data including Consumer Price Index and non-farm payroll figures [4]. The White House indicated this data may never be released, leaving policymakers “flying blind at a critical period” [4].

Collins emphasized that “absent evidence of a notable labor market deterioration, I would be hesitant to ease policy further” [1]. She noted that while the labor market has “clearly softened,” downside risks have not worsened since the summer, and she views current short-term borrowing costs as “mildly restrictive” amid financial conditions that remain supportive of economic growth [2].

Collins’ comments highlight growing fissures within the FOMC [5]. While she supported both November and December rate cuts, she described the most recent one as “a closer call,” suggesting a genuine policy reassessment rather than a consistent stance [3]. This division creates significant uncertainty as Chair Jerome Powell previously indicated that a December rate cut is “not a foregone conclusion,” despite market pricing of a high probability [5].

The convergence of three critical factors creates a unique policy challenge:

1. Data Blackout
   : The absence of October economic metrics removes crucial decision-making inputs
2. Persistent Inflation
   : Nearly five years of above-target inflation suggests potential structural factors
3. Fed Division
   : Growing policy disagreements within the FOMC create communication challenges

This combination has led to market participants receiving mixed signals, as evidenced by the divergence between Treasury yields falling (suggesting rate cut expectations) and growth stocks declining (reflecting higher-for-longer rate concerns) [0].

The current environment mirrors periods of Fed policy uncertainty that historically lead to increased market volatility and sector rotation [0]. The technology sector’s underperformance (-0.81%) is particularly telling, as growth stocks typically suffer most from rate uncertainty due to their sensitivity to borrowing costs and discount rates [0].

Collins’ positioning on the hawkish side of the FOMC debate suggests that even if inflation data were available, the threshold for further easing would remain high. Her emphasis on balancing “inflation and employment risks in this highly uncertain environment” indicates a cautious approach that prioritizes inflation containment over growth stimulation [3].

1. Policy Uncertainty Risk
   : The division within the FOMC creates heightened volatility risk around policy decisions, particularly with the December meeting approaching
2. Data Blackout Risk
   : The lack of October economic data makes policy decisions increasingly speculative and could lead to abrupt shifts when information becomes available
3. Inflation Persistence Risk
   : Nearly five years of above-target inflation suggests structural factors may be at play, potentially requiring a more restrictive policy stance
4. Labor Market Deterioration Risk
   : Any significant weakening in employment data could trigger rapid policy reversal, creating market whiplash

Decision-makers should closely monitor:

• Government Shutdown Resolution
  : Timeline for data collection and release
• Upcoming Fed Speeches
  : Additional FOMC member perspectives for policy direction clues
• Inflation Data Releases
  : When available, for trajectory assessment
• Labor Market Indicators
  : Weekly jobless claims and private sector data as alternatives to missing government reports
• Treasury Yield Movements
  : 10-year and 2-year yield spreads for growth expectations

The combination of data uncertainty and Fed division creates a challenging environment for investment decisions, with historical patterns suggesting increased volatility ahead [0].

The analysis reveals that Collins’ hawkish shift represents a significant policy development amid unprecedented data uncertainty. Her emphasis on a “high bar” for further rate cuts, combined with the ongoing government shutdown preventing crucial economic data release, creates a complex decision-making environment for market participants.

The mixed market reaction, with defensive sectors outperforming while growth stocks declined, reflects investor uncertainty about the policy path forward. The divergence between Treasury yields falling and technology stocks declining suggests market participants are grappling with conflicting signals about the likelihood and timing of future rate adjustments.

The growing division within the FOMC, combined with the data blackout, suggests that policy decisions in the coming months will be increasingly challenging to predict, potentially leading to higher market volatility as investors react to new information and Fed communications.