Anna Paulson, President of the Federal Reserve Bank of Philadelphia and a voting member of the Federal Open Market Committee (FOMC) in 2026 through a rotating regional president seat, said further gradual rate hikes are appropriate and warned the Fed will move more aggressively if the inflation outlook worsens.
As a voter this year, her call for more tightening counts at the table. She backed the recent rate decisions, arguing that slow increases give the economy time to adjust and give officials time to gauge their impact. Policy has to stay “somewhat restrictive,” she added, with the rate path depending on how the economy evolves.
Inflation drives that stance. CPI data show it remains a problem, with underlying inflation stuck between 2.5% and 3%. Paulson called the risks to the outlook elevated and said the Fed has “more work to do.”
She also flagged a blind spot: the effect of AI and energy on inflation is difficult to measure. The economy, meanwhile, has proved more resilient than she expected, and she described the job market as firm and steady.
Key Quotes:
Monetary Policy
Further gradual rate hikes are appropriate; the Fed will move more aggressively if inflation outlook worsens
Policy needs to be ‘somewhat restrictive’, with the rate path depending on how the economy evolves
Supports recent Fed decisions, saying gradual hikes give the economy time to adjust and officials time to gauge their impact
Inflation
CPI data show inflation remains a problem, with underlying inflation stuck between 2.5% and 3%
Inflation outlook risks elevated
Central bank has ‘more work to do’ to reduce inflation
AI & Energy
AI and energy effects on inflation difficult to measure
Growth & Labor Market
Economy more resilient than expected, job market firm and steady