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Philadelphia Fed chief says underlying inflation is still too high

Anna Paulson said policy should remain mildly restrictive, and described the Fed’s stance as less about close calls and more about whether inflation is easing.

Reported · Written up by our desk · Central Banks

Anna Paulson, President of the Federal Reserve Bank of Philadelphia, told CNBC that underlying inflation remains too high and that monetary policy needs to stay mildly restrictive, adding that the current environment likely fits that description.

Paulson said the Fed is committed to getting inflation back to target and emphasized an open-minded approach to the policy outlook. She also argued that if policy is in the right place, inflation should ease, but if monetary policy is not restrictive enough, incoming data could show sticky, high inflation.

In her remarks, Paulson said the job market is stable and that energy prices are volatile, suggesting energy-related moves can be looked through as supply shocks. She added that uncertainty in the current environment makes forward guidance difficult.

Paulson also said the decision to keep rates steady at the FOMC was not a close call. FXStreet included a daily snapshot of USD performance versus major currencies, noting the US dollar was strongest against the Japanese yen at the time of publication.

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