Paulson Keeps Open Mind on Rate Decisions Amid Persistent Inflation

Philadelphia Fed President Anna Paulson expressed an open-minded approach to future monetary policy decisions, including the possibility of higher interest rates. In a statement, she acknowledged that recent improvements in some inflation data are welcome but only a single step towards meeting the Federal Reserve's 2% target.

Paulson emphasized her top priority is returning inflation to its desired level while maintaining full employment. She noted that current data indicate Fed policy has had some restraint on the economy, and incoming figures will guide her interest-rate decisions.

In a CNBC interview, Paulson suggested a stronger response to inflation could involve raising rates or keeping them unchanged for longer. She estimated underlying inflation at between 2.4% and 2.8%, stating that these price pressures have been elevated for a long time and are what she is most focused on as she evaluates progress towards the 2% target.