Fed Paulson hints: support two more rate cuts this year, each 25 basis points

On October 14, Paulson, the president of the Philadelphia Federal Reserve and the 2026 FOMC voting committee, hinted that she would prefer to cut interest rates twice more this year, each by 25 basis points, because monetary policy should be designed to ignore the impact of tariffs on consumer price increases. "The key thing for me is that I don't see the conditions that could turn tariff-induced price increases into persistent inflation - especially in the labour market," Paulson said. Paulson said policymakers' decision to cut interest rates by 25 basis points last month was "justified". With monetary policy moderately tighter, she advocated easing monetary policy along the lines of the Fed's last summary of economic forecasts. The median of these forecasts supports two more rate cuts by 25 basis points before the end of the year. She added that if the economy develops as I expect, our monetary policy adjustments this year and next will be sufficient to bring labor market conditions close to full employment.