Anna Paulson Keeps Open Mind on Monetary Policy Amid Persistent Inflation

Philadelphia Fed President Anna Paulson said she is keeping an 'open mind' about the path ahead for monetary policy, including the possibility of higher interest rates. In a statement from her bank, Paulson noted that recent improvement in some inflation data is welcome but it's only one step towards achieving the Federal Reserve's 2% inflation target.

Paulson emphasized that her top priority is returning inflation to 2% while maintaining full employment. She added that if underlying price pressures remain persistently high, continued lack of progress would indicate the need for tighter policy. Paulson supported the decision by policymakers to keep the federal funds target range unchanged at 3.5% to 3.75%, which was met with dissent from three officials who favored a rate increase.

In a CNBC interview following her statement, Paulson said a stronger response to inflation could involve raising rates or keeping them unchanged for longer. She noted that current data indicate that Fed policy is exercising some restraint on the economy and that incoming figures will guide her interest-rate decisions.