Boston Fed president Susan Collins told Yahoo Finance the central bank needs to remain patient as it waits for the right opportunity to begin cutting interest rates, citing "scenarios" consistent with one or two cuts "later in the year."

That view, she said, is reinforced by volatile data that still offers a mixed picture about the US economy, the labor market, and inflation.

But her caution is also a reflection of intelligence collected on the ground as she visits with business owners, bankers, and consumers in her district.

"A lot of the data is telling us what happened last month or last quarter," said Collins, who oversees a district that covers six states from Maine to Connecticut. "When we talk to people, they're telling us what they're seeing right now."

Collins invited Yahoo Finance to tag along during one such field visit this week as she toured Lawrence, Mass., a former textile town 28 miles north of Boston that is experiencing an economic renaissance.

The Boston Fed and 11 other regional Fed banks across the US use such visits to amass observations about their local economies, compiling them into a "Beige Book" that is released ahead of each Fed policy meeting in Washington, D.C.

What Collins heard over the course of her day in the field were concerns about inflation, worries about cautious customers no longer willing to absorb price hikes, and anxious uncertainty about when the central bank would start cutting rates.

Collins also heard about strong economic demand and a labor market that is starting to come into better balance.

The assorted commentary, she said, reinforced both her optimism and her caution about the path of monetary policy.

"There are differences across sectors, there are differences across regions," she said. "And what I heard today is very consistent with that in the sense of some firms that are still seeing quite strong demand and others where they're seeing consumers being a bit more cautious in terms of their spending."

The Fed’s benchmark policy rate is currently at a 23-year high and has been at that level since last July.

Collins and her Fed colleagues last week revised their outlook for the rest of 2024, signaling a median estimate of one cut instead of the three seen back in March.

Collins declined to say if she expects a first cut in September as compared with November or December.

"We have learned that there is no crystal ball," she added.

'A soft landing is in our future'

Collins started her day hearing firsthand from local bankers and real estate community developers who are part of the Lawrence Partnership, a group dedicated to collaborating with each other and city and state governments to build a stronger local economy.

The discussion centered on how investments in low-income neighborhoods fueled Lawrence's redevelopment over the past 10 years, with affordable and market-rate housing happening alongside new downtown commercial and residential redevelopment.

The large textile mills in the city, which once included over two million feet of empty or underused space, are now largely renovated, mostly as new housing.

One meeting participant, Reading Cooperative Bank CEO Julie Thurlow, said the economy looks resilient based on demand for loans outside housing.

"I’m optimistic that a soft landing is in our future," said Thurlow, who is also chair of the American Bankers Association.

At the same time, she acknowledged that the current level of rates is “challenging" for banks that are watching their margins come under pressure. As rates went up, so did their costs of attracting new deposits.

"I think as interest rates come back down, we will be able to see more opportunity and more growth ahead."

Collins offered some encouragement — “Watching how you work together to move forward is really inspiring” — before moving to her next stop.

Roughly 300 people gathered in a high school gym to hear Collins give a speech, where she once again reinforced the patience of the central bank as it waits for the data to line up in favor of a rate cut.

“In my view, the data suggest an economy with demand and supply coming into better balance, as required to restore price stability," she said.

"However, this process may just take more time than previously thought. It is too soon to determine whether inflation is durably on a path back to the 2% target.”

'Realistic optimist'

Collins spent her afternoon in Lawrence talking to small businesses and large businesses, asking them about everything from inflation to the employment situation.

“What are the major economic issues impacting your businesses and operations?” she asked one group of small business owners.

A local baker told Collins that "it’s inflation. We're all consumers. At the end of the day, we all buy food. And our biggest challenge over the past three years has been how do we provide a high-quality product at a price that people are willing to pay."

One real estate developer said his major concern is the cost of living, especially the burden placed on customers who rent from him.

"When you talk about seeing the light at the end of the tunnel, that tunnel for the cost of living and rent is dark for me,” this builder said, pointing to how difficult it is for people making $25-$40 an hour to make rent. "I don't know where we're going."

The concern and aggravation with high interest rates were palpable among some of the owners who met with Collins.

At one point, one of them pounded the table in jest, chanting "lower rates."

Collins heard more about price increases while she toured a factory operated by Gemline, which prints custom logos for companies on bags, hats, and coolers. Gemline is one of the largest employers in Lawrence.

"The time of being able to just hand off price changes is now over," Gemline CEO Jonathan Isaacson said. "From our perspective, during COVID, we did pass through a number of price changes and everybody understood it. Today, things seem to have normalized, and people just aren't accepting it anymore."

Isaacson said he will likely have to discount a bit to move merchandise, but he also noted that he sees different spending patterns and stories depending on the industry. He expects some pullback among food providers but said the IT sector is booming due to AI.

"It's a story of the economy today that there's not one economy," he said. "It seems like to us there's a bunch of economies and a bunch of sectors and they're all behaving differently based on what their experience is with their customer base."

Collins said the messages she heard gave her new assurances that the labor market is acting in a way that is favorable for the Fed.

"I heard about firms that are investing in their people to increase their longevity because they're committed to the workers that are here," she said, adding, "That's a healthy labor market."

Collins sees herself as "that realistic optimist" about the Fed's current campaign.

"I am optimistic that we're going to bring that inflation down, but we're going to do it amid a labor market that stays quite healthy."

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance