Fed's Paulson: Keeping Open Mind About Where Policy Goes From Here

By Jessica Coacci

Philadelphia Fed President Anna Paulson said she supported the Federal Open Market Committee's decision to hold interest rates steady last week, and is keeping an open mind about where monetary policy goes from here.

Paulson said that while the latest inflation data looked somewhat encouraging, the key question is whether the federal funds rate is appropriately calibrated to return inflation to the central bank's 2 percent target in an acceptable time frame while sustaining full employment, according to the text of an essay on the economy.

If policy is appropriately calibrated, Paulson said she would expect to see growing signs that inflation is coming down. However, if instead underlying inflation remains stubbornly elevated, the passage of time without progress would itself signal that more restrictive policy is needed.

When describing current conditions, Paulson said her overall assessment of where the economy is headed has not substantially changed.

"The conflict in the Middle East has repeatedly subsided and then flared up again. Old tariffs expired, new tariffs were put in place. More artificial intelligence investments were announced, and new AI models were released," Paulson said.

Despite these significant developments, the fundamental economic picture remains similar, Paulson added.

Write to Jessica Coacci at jessica.coacci@wsj.com

(END) Dow Jones Newswires

August 04, 2026 08:14 ET (12:14 GMT)