Paulson Hints at Higher Interest Rates Amid Stubborn Inflation

Philadelphia Federal Reserve President Anna Paulson is keeping an 'open mind' about future monetary policy, hinting that higher interest rates may be needed to combat high inflation.

In a statement after last week's Federal Open Market Committee meeting, Paulson said the recent improvement in some inflation data was welcome but only a step in the right direction. She emphasized her commitment to delivering 2% inflation while sustaining full employment.

Paulson's comments come as the Fed held its overnight interest rate target range steady at between 3.5% and 3.75%, despite inflation pressures above the 2% target. Three officials dissented, voting in favor of a rate hike.