Fed’s Paulson Signals Cautious Approach to Rate Cuts Amid Inflation Watch

Federal Reserve official Anna Paulson indicated at the Allied Social Science Associations Annual Meeting that further rate cuts are unlikely before late 2026. Speaking in her hometown, Paulson emphasized the central bank's preference to monitor economic developments before adjusting rates. "I see inflation moderating, the labor market stabilizing, and growth hovering around 2 percent this year," she stated, suggesting modest rate adjustments might follow if these conditions hold.

The Fed maintains its restrictive monetary stance to combat inflation, with Paulson noting current rates remain "slightly restrictive" to curb price pressures. As a voting member of the Federal Open Market Committee in 2026, her views carry weight in interest rate decisions. Last year's three consecutive 25-basis-point cuts—totaling 0.75%—brought rates to 3.5%-3.75%, reflecting the delicate balance between cooling inflation and preserving employment.