Boston Fed president Susan Collins told Yahoo Finance she expects the central bank to hold rates where they are for "longer" due to economic uncertainties triggered by President Trump’s tariffs, but it "may still be appropriate" to cut toward the end of the year.

That represents a more cautious view from the policymaker, who previously said a rate cut later this year was likely.

Traders currently are betting the Fed will start cutting in June, but Collins also downplayed that possibility in another sign of increased caution. She and her fellow policymakers kept rates unchanged last month.

When asked in an interview whether a June rate cut is too soon, Collins said, "I would be looking for more confidence that we were back on that disinflation trajectory, you know, of course, unless we are in a more adverse context."

Several other Fed officials this week have poured cold water on any near-term rate cuts, making it clear they were still quite worried about the inflationary effects from tariffs in the months ahead.

Collins did offer some reassurances on how markets are holding up amid gyrations in Treasury yields, saying markets are "continuing to function well" and that "liquidity has been maintained."

"That's something of course we're watching very carefully, and we do have tools to intervene if there were concerns in terms of market function or in terms of liquidity, and we are absolutely prepared to move," Collins said.

Read more about the latest moves in Treasury yields and markets.

The gyrations in the Treasury market have also raised questions about whether the moves could have implications for the pace at which the Fed is allowing Treasurys to roll off its balance sheet.

On March 19, the central bank announced it would slow the rate of decline in its Treasury holdings per month to $5 billion, down from $25 billion.

Collins said the slowing of the Fed’s runoff positions it well to continue "normalizing the balance sheet in a steady way that does not contribute to some of the market."

A 'pervasive wait and see approach'

What Collins expects to happen this year if Trump's tariffs stay in place is that inflation will rise, perhaps above 3%, and for economic growth to slow.

She doesn’t see a "significant downturn" coming but she also wouldn’t rule out a more “adverse” scenario — which she emphasized is not her "baseline."

As for her policy stance for the rest of the year, she said, "At this point, my expectation is that we are likely to have to hold for longer than I had before,” but “it may still be appropriate to normalize toward the end of the year.”

For Collins to support a rate cut, she would need to see that long-term inflation expectations are well anchored. She noted that "one of the very important assets the Federal Reserve has is its credibility.”

The latest University of Michigan consumer sentiment survey released Friday showed pessimism over the inflation outlook soared again, as one year-inflation expectations jumped to 6.7% — the highest since 1981 — from 4.9% the month prior.

Just three months ago, consumers had expected inflation of 3.3% over the next year.

Read more: $6 eggs and other inflation pain points: Here's where prices are rising

Long-run inflation expectations, which track expectations over the next five to 10 years, climbed too, hitting 4.4% in April, up from 4.1% in March.

Collins said she is hearing and seeing in surveys that many firms expect tariffs to take longer to really factor in because they need to understand what their own pricing looks like.

"I am rethinking my initial view that it may only take a couple of months if the tariffs were to be kept at a certain level,” she added.

From businesses in her district, she said, "what I hear is a pervasive wait-and-see approach as firms consider how to react to an environment that is highly uncertain."

When asked whether the odds of a recession are rising, she said, "my current outlook again is not the more adverse one, but I wouldn't rule it out."