Paulson Sticks with Current Rates, Eyes More Progress on Inflation

Philadelphia Federal Reserve President Anna Paulson expressed her satisfaction with the current interest rates in an interview with CNBC. She stated that she believes the rates are sufficient to keep inflation moving towards the central bank's goal of 2%.

Paulson emphasized that she has an open mind about where monetary policy should go, but was confident in her vote last week to keep the Fed's benchmark borrowing rate anchored at its current target level of 3.5%-3.75%. She cited the need for mildly restrictive policy to bring underlying inflation back down to 2% within a reasonable timeframe.

Paulson acknowledged that some dissenting voters questioned whether the current rate level is sufficiently restrictive to bring inflation lower, but she maintained that voting with the majority was not a close call. She believes underlying inflation outside of energy supply shocks, tariffs, and other factors is around 2.4%-2.8%.

While Paulson sees some mild progress in reducing inflation, she wants to see more before considering adjusting rates further. If the core inflation level, currently at 3.3%, doesn't move lower, she'll be open to recalibrating monetary policy.