Fed's Paulson Says September Inflation Data Clinched Rate Hike

By Dean Seal

Philadelphia Fed President Anna Paulson was on the fence about raising interest rates until reports started rolling in this month that showed mounting prices pressures and minimal progress on inflation.

Paulson, a voting member of the Federal Open Market Committee, said at a conference on Thursday that she'd kept an open mind earlier in the summer about whether policy was already restrictive enough to get inflation back to the Fed's 2% target.

"By September, it was clear that the balance of risks had shifted," Paulson said.

Underlying inflation data filtered in showing little to no progress, she said. While tariff-related price pressures have cooled, pressures from the conflict in the Middle East and the buildout of artificial intelligence infrastructure have risen, Paulson said. The data also showed that economic growth firmed up and the labor market strengthened.

That's why Paulson supported the rate hike last week, she said, signalling that more could be coming. "If conditions evolve as I expect, some modest further tightening may be warranted," Paulson said.

Like other Fed officials who have spoken publicly since last week's hike, which received unanimous support from the FOMC, Paulson said that reducing inflation has become her top policy priority.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

September 24, 2026 11:42 ET (15:42 GMT)