Fed's Paulson: Rate cuts require progress on inflation
Federal Reserve (Fed) Bank of Philadelphia President Anna Paulson said that she favored leaving interest rates unchanged and conditioned lower borrowing costs on making sustained progress on inflation, Bloomberg reported on Tuesday.
Key quotes
Policy is mildly restrictive and that restrictiveness is helping to keep inflation pressures in check while the labor market remains stable.
Current policy rate is suitable and keeps applying downward pressure on inflation.
Healthy markets start weighing scenarios of rates holding or increasing.
Some families struggle with rising prices, but overall resilience prevails.
If job market stays balanced, rate reductions suitable only with new inflation progress.
Appropriate rate increase possible if growth exceeds potential or inflation threats arise.
No need seen at last meeting to alter policy language.
It’s still early to assess AI’s impact on productivity and inflation.
Risks to inflation and outlook are "super-elevated" right now.
Labor market currently resembles full employment.
Iran conflict prolongation would heighten inflation and unemployment risks.
Current steadiness in job market is unusual.
Market reaction
At the time of writing, the US Dollar Index (DXY) is trading around 99.31, up 0.33% on the day.
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