Fed's Paulson keeps 'open mind' on rate policy amid high inflation

Federal Reserve Bank of Philadelphia President Anna Paulson stated on Tuesday that she is maintaining an "open mind" regarding the future direction of monetary policy, particularly in light of persistent inflation. In her first public comments since the latest Federal Open Market Committee meeting, Paulson indicated support for the decision to hold the target interest rate steady at between 3.5% and 3.75%. She acknowledged the recent welcome improvement in some inflation data but stressed it is only a single step towards the Federal Reserve's 2% target. Paulson emphasized her commitment to assessing evidence to determine the appropriate policy path, with her highest priority being the delivery of 2% inflation while sustaining full employment. She noted that current Fed policy appears to be restraining the economy and that she will monitor data closely. Paulson suggested that if underlying inflation remains elevated, further restrictive policy measures may be required. She pointed out that underlying inflation is currently estimated to be around 2.4% to 2.8%, a level she is closely focused on. Paulson also commented on volatile oil prices, suggesting that temporary supply shocks, like a brief period of Middle East stability, reinforce the case for looking past such disruptions when setting monetary policy.