Anna Paulson Signals Potential Interest Rate Hikes to Combat Inflation

Anna Paulson, President of the Federal Reserve Bank of Philadelphia, stated on Tuesday that she is maintaining an open mind regarding future monetary policy. While noting some improvement in recent data, she estimated that underlying inflation remains between 2.4% and 2.8%, which is significantly above the Federal Reserve's 2% target.

Paulson expressed support for the Federal Open Market Committee's recent decision to keep the overnight interest rate target range steady at 3.5% to 3.75%. However, she noted that three officials dissented from this decision in favor of a rate hike.

She emphasized that her highest priority is delivering 2 percent inflation while sustaining full employment. Paulson indicated that if inflation remains stubbornly elevated, the lack of progress over time would signal a need for more restrictive policy to reach the Federal Reserve's goals.