Philadelphia Fed President Paulson, a 2026 FOMC voter, said bringing inflation
back to 2% is his top priority and outlined two scenarios: current policy could
already be sufficiently restrictive to return inflation to 2% within an
acceptable timeframe, or policy may still be too loose — the strongest evidence
for the latter being inflation has been above target for more than five years.
He said he will judge by the accumulation of data: repeated months of
improvement in inflation, business contacts reporting easing pricing and hiring
pressures, tariffs, energy and AI-related pressures coming under control, and
inflation expectations anchored near 2%. If core inflation remains elevated with
no progress over time, tighter policy would likely be required. He said he will
remain open-minded while seeking to achieve 2% inflation alongside full
employment.
