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2025-12-12 22:54:51
[Federal Reserve Official Paulson: More Concerned About Labor Market Risks; Current Monetary Policy Continues to Curb Inflation] New York, December 12 – Philadelphia Federal Reserve President Paulson said on Friday that her current concerns about the weak labor market are slightly greater than the upside risks to inflation, and that current monetary policy remains restrictive and will help push inflation back to the Fed's 2% target level. Speaking at an event hosted by the Delaware Chamber of Commerce in Wilmington, Paulson noted that tariffs were the main factor pushing up prices this year, and that inflation is likely to fall significantly next year as their impact fades. She pointed out that the current target range for the federal funds rate of 3.5%-3.75% is slightly restrictive, and the cumulative effect of previous policies will continue to help cool inflation. Regarding the labor market, Paulson described it as "bending, but not breaking." She stated that the Fed's cumulative rate cuts of 75 basis points over the past three meetings have provided insurance against further deterioration in the labor market. On Wednesday, the Federal Reserve cut its benchmark interest rate by 25 basis points to its current range, aiming to balance high inflation with risks in the labor market. However, due to the lack of key economic data caused by the government shutdown, the Fed did not provide clear guidance on whether to cut rates again in January. Paulson revealed that she will become a voting member of the Federal Open Market Committee (FOMC) in January, at which time the Fed will have more information, which is expected to provide greater clarity on the inflation, employment outlook, and related risks, allowing for more targeted discussions on interest rate policy.
