Fed’s Paulson (2026 voter) says she is keeping an open mind on the monetary policy outlook amid elevated inflation

• A more restrictive policy may be needed if inflation remains stubbornly high.
• Underlying inflation remains around 2.4%–2.8% and returning inflation to 2% is her highest priority.
• labour market has stabilised, and temporary energy supply shocks should be looked through when setting policy.

Remarks from a newly relevant voter carry more weight than the standard speaking-circuit fare, and the market's first task with any incoming FOMC participant is to locate them on the hawk-dove spectrum; commentary of this kind, flagging openness to more restrictive policy, places Paulson toward the hawkish end of the current distribution. The substance is nonetheless conditional rather than committed: an open mind plus a willingness to look through temporary energy supply shocks is the classic hold-and-watch posture, and the transmission to rates runs through the front end only insofar as it shifts the perceived median rather than the tails. The explicit distinction drawn between headline energy-driven inflation and the underlying rate is the part that matters mechanically, since looking through supply shocks argues against reacting to near-term prints while the stated underlying range above target keeps the bar to easing high. Prior form with regional Fed presidents taking a first-vote year is that early speeches are used to establish credentials and are read accordingly, with follow-up remarks tested for consistency rather than novelty. Worth watching are whether other officials echo the 'more restrictive may be needed' phrasing and how this framing holds up against the next inflation releases, which it has now made more sensitive.