Fed's Paulson (2026 voter) is comfortable holding rates steady at next Fed meeting; labour market risks a little bit higher than risks of sticky inflation
Importance
Level 1
- “I want monetary policy restrictiveness to be playing a role to get us all the way back to 2%.”
- If her baseline outlook for steady growth, declining inflation and a stable labour market is right, “well, then we should be at neutral,” an interest-rate setting she thinks is “a little lower than we are now.”
- “The labor market could break quickly…. So any sign of breaking versus bending is going to be something that I pay sharp attention to.
- “It’s not like demand conditions are so strong that it’s easy to raise prices. Firms are being very careful, very thoughtful.”
- Thinks rates are still high enough that they are slightly above a neutral level that neither spurs nor slows growth, and said that was appropriate for the time being to help finish the job of bringing inflation down.
- She would be particularly focused on January price data, because businesses often reset prices at the beginning of the year.
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