Fed's Paulson: More Gradual Rate Hikes Needed to Curb Inflation

Federal Reserve Bank of Philadelphia President Anna Paulson said Tuesday the central bank must continue raising interest rates to combat persistent inflation, calling for further gradual monetary policy tightening. Paulson stated that policy should remain somewhat restrictive to bring inflation back to the 2% target, noting price pressures have exceeded the goal for over five years with core inflation between 2.5% and 3%. She cited tariffs, energy prices, and AI investments as inflation drivers. A voting member of the Federal Open Market Committee this year, Paulson joins other hawkish officials after October consumer prices rose more than expected. Markets price an 88.8% probability of a 25-basis-point rate hike in December, following September's first increase in three years.