Fed's Paulson Signals Possible Further Rate Hikes to Combat Inflation
Philadelphia Federal Reserve President Anna Paulson warned on Thursday that additional interest rate hikes may be necessary to bring inflation back down to the US central bank's target of 2%. Speaking at an event, Paulson said that 'inflation remains stubbornly elevated' and emphasized the importance of returning it to the desired level.
In her comments, Paulson supported the recent rate hike by a quarter of a percentage point to the 3.75%-4.00% range, citing a shift in the balance of risks and lack of progress in underlying inflation. Looking ahead, she noted that 'some modest further tightening may be warranted' to help get inflation back on track.
Paulson's comments come as the Fed is trying to lower inflation amid pressure from various factors, including President Donald Trump's import tariffs and surging energy prices generated by the US-Israeli war with Iran. She also pointed out that strong investment in the technology sector is driving up inflation, with underlying inflation running at a range of about 2.5 to 3%.