New Fed Voting Member: No Rush to Cut Rates, Job Risks Higher than Inflation Risks

In breaking news, Anna Paulson, the newly appointed President of the Philadelphia Fed and a voting member of the FOMC until 2026, stated in her first national media interview that there is no need to rush to cut rates at the moment. She also expressed clear support for Fed Chairman Powell's leadership and the central bank's independence.

Paulson mentioned that the current interest rate level is still slightly above the neutral range, which helps continue pushing inflation back to the 2% target. She expressed satisfaction with the decision to keep rates unchanged at the January meeting. She expects substantial progress in inflation within the year, but whether a rate cut later this year will depend on two factors: whether inflation continues to ease as expected, and whether there is an unexpected deterioration in the job market.

In terms of risk assessment, Paulson believes that the downside risk in the job market is slightly higher than the stickiness of inflation risk. She pointed out that recent job growth has been highly concentrated in the healthcare and social assistance sectors, with the labor market cooling more than expected. Any signs of a slowdown turning into a collapse would be important warning signals.

Overall, Paulson is seen as a dovish member within the FOMC, but her stance emphasizes patience and data dependence. While ensuring inflation returns to target, she prioritizes guarding against risks of disorder in the job market.

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