Philadelphia Fed's Paulson Backs 3.5%-3.75% Rates as Sufficient for 2% Inflation
Updated
Updated · CNBC · Aug 4
Philadelphia Fed's Paulson Backs 3.5%-3.75% Rates as Sufficient for 2% Inflation
3 articles · Updated · CNBC · Aug 4
Summary
Anna Paulson said the Fed’s current 3.5%-3.75% policy rate is already mildly restrictive enough to guide inflation back to the 2% target, calling her vote to hold rates last week “not a close call.”
Paulson said she now needs clearer progress in underlying inflation, which she estimates at 2.4%-2.8% excluding energy shocks, tariffs and other temporary factors.
June core inflation, the Fed’s main forecasting gauge, stood at 3.3%, underscoring why some officials doubt policy is restrictive enough even after the Fed held rates steady all year.
That split surfaced in last week’s 9-3 FOMC decision to keep rates unchanged; Paulson said she remains open to recalibrating policy if inflation stops moving lower.
Paulson also said she has an open mind about Chairman Kevin Warsh’s proposed process changes, including cutting FOMC meetings from eight a year.