POWER: Poland Eyes Decision on Possibly Separating Coal Assets from Energy Firms

Boston Fed President Collins, a dovish-leaning FOMC member, talks down Fed easing prospects in a CNBC interview: "In my view, that it's really appropriate for policy to be patient, careful, and there's no urgency for making additional adjustments, especially given all of the uncertainty, even though, of course, we're still somewhat restrictive."

• Asked if that means she still sees rates coming down this year, she says "what I would say is, again, there is more to do. I have seen the underlying trend in inflation going in the right direction, but there's a lot of uncertainty there, and it's important to preserve those healthy labor markets, and so I think the data is going to have to tell us. You know, at some point, I certainly would see additional normalization in terms of what the policy stance is. But again, I don't see an urgency there. And I think we'll have to see when it will be appropriate to ease rates further."
• Collins is a 2025 FOMC voter (the other regional presidents are Goolsbee, Musalem, Schmid) and it doesn't sound like there is much, if any, support for a March cut at this point.
• Collins (whose district borders Canada, one of the countries in line to be hit by US tariffs) says regarding tariffs that the Fed could look through one-off tariff increases, so long as expectations remained well-anchored: "The kind of broad based tariffs that were announced over the weekend, one would expect to have an impact on prices...with broad based tariffs, you actually would not only see increases in prices of final goods, but also a number of intermediate goods. And so being sure to assess the implications related to goods going across the borders, but there are many different dimensions, and there are second round effects as well, which make it particularly hard to really assess what the amounts would be, and one would expect with a permanent tariff, and you know, we don't know what the time frame would be that that would cause a rise in a price level. That's a short term impact on inflation, unless there are additional impacts that if expectations remained well anchored you'd expect the Federal Reserve would try to look through, but of course there are many factors going on from that perspective."
• On tariff growth impact, Collins sounds equivocal: "On the growth side, if you have an increase in intermediate goods for the firms that are impacted, that is likely to impact their production. There also can be a demand side effect. So to the extent that tariffs have an impact on real incomes, that can reduce demand for goods and services, but at the same time, increases in the prices of imported goods can cause demand to rise on the domestic goods that are very substitutable. So there's a range of different factors on the real side that are important to consider as well. "

• The Times reports separately that the US-Mexico deal appears to have come together with a package of proposals from Mexico to recalibrate its trade practices within the existing USMCA trade agreement.
• NYT notes that Sheinbaum said at her news conference that Trump brought up the US trade deficit with Mexico: “I told him that, in fact, it was not a deficit, that we had a trade agreement, that we are trade partners.” she added, according to the Times, that the current U.S.-Canada-Mexico trade agreement was “the best way” to continue competing against China and other regions of the world.
• The Times continues: "Mexico will also focus on expanding an import substitution plan, dubbed Plan Mexico... The program essentially seeks to curb imports from countries like China, start producing those goods in Mexico and strengthen Mexican industries..."
• Taken together with stronger measures on border security, which Canada has already begun implementing, the deal appears to offer a blueprint for Canada to resolve the dispute before the tariffs come into effect tomorrow. 

• US TSY 26W AUCTION: NON-COMP BIDS $2.020 BLN FROM $72.000 BLN TOTAL