Boston Fed President Susan Collins delivered a pointed warning this week: if inflation does not show clear, continued progress, the Federal Reserve will need to raise interest rates "soon." That word, in the careful language of central banking, is not vague. It means the next meeting or the one after. And it lands at a moment when the Fed is more divided than it has been in years.

The inflation measure the Fed watches most closely, which strips out food and energy prices, came in at 3.3% for the year through July. That matched expectations, but it offered no relief either. The same reading as June. Still well above the Fed's 2% target. Still stuck.

The broader inflation number, which includes food and energy, held at 3.7% annually. That too was unchanged from June, and slightly worse than economists had expected.

Sixty-five months above target

Inflation has now exceeded the Fed's goal for 65 straight months. The Fed's rate, currently set between 3.5% and 3.75%, has been frozen since December as officials waited for prices to fall on their own. Some officials still believe they will. Collins said she thinks that remains possible. But she also said the Fed cannot wait indefinitely, and added that "concerns about high prices are pervasive" in her conversations with businesses and households across New England.

That last phrase is the part worth sitting with. Inflation at this level does not just cost money in the short run. Collins warned that the longer prices stay elevated, the greater the risk that people stop expecting them to come back down. When that happens, the psychology of inflation becomes self-reinforcing: workers demand higher wages to keep up, businesses raise prices to cover those wages, and the cycle locks in. Stopping it then requires much more pain than stopping it now.

Three Fed officials already dissented from last month's decision to hold rates steady. They wanted to raise. Collins's remarks suggest that group could grow.

What's keeping prices elevated

The inflation that has persisted this long has more than one engine. The Trump administration's tariffs on imports sent a wide range of goods prices higher starting last year. Then, in late February, U.S. and Israeli air strikes against Iran sent energy prices surging after the conflict knocked out roughly a fifth of global oil supplies. PCE peaked at 4.1% in May before retreating. Oil prices have pulled back from their spring highs, but the conflict has not resolved, and energy prices remain elevated.

Now there is a new pressure arriving. Trade negotiations with Canada collapsed last week. New tariffs on roughly $20 billion in Canadian goods are set to take effect, with both sides announcing retaliatory measures that could escalate further unless a deal is reached.

That is a meaningful combination. Energy prices still high because of a war with no end in sight. Goods prices rising again because of tariffs, and potentially rising more. Collins said she is closely watching both.

What Jackson Hole will and won't tell you

Fed Chairman Kevin Warsh, newly installed, delivers his first public speech as Fed chair on Friday at the annual Jackson Hole symposium in Wyoming. Analysts expect him to avoid signaling anything specific about September's rate decision, and instead offer a broader view of where the economy stands.

That may be the right call for institutional reasons. But for anyone holding a mortgage, carrying a car loan, or running a small business that borrows to operate, the stakes in that Friday speech are concrete. If Warsh signals that the rate-hike faction is gaining ground, borrowing costs will likely rise. If he signals patience, they probably stay where they are, which is still historically high.

The uncomfortable reality is that even "holding steady" is not neutral. Rates at 3.5% to 3.75% are already putting pressure on housing affordability, business investment, and consumer credit. A raise would tighten that further. But if inflation stays sticky and expectations start to drift, the alternative may be worse.

Collins put it plainly: the Fed has to deliver price stability. The question is whether it can do that without adding more economic pain to households already stretched thin by five years of prices running above target.