Fed's New Board Member: Not in a Hurry to Cut Rates, Sees Employment Risk as Higher than Inflation Risk

On January 16, Anna Paulson—Philadelphia Fed’s newly installed president and a 2026 FOMC voting member—said in her first national media interview there’s no need to rush rate cuts, explicitly backing Fed Chair Powell’s leadership and central bank independence. Paulson noted current interest rates remain slightly above the neutral range, which continues pushing inflation toward the 2% target. She expressed “satisfaction” with the Fed’s rate hold at its January meeting. She expects substantial inflation progress this year, but any rate cut later in 2024 will hinge on two factors: whether inflation eases as forecast, and whether the labor market sees an unexpected deterioration. On risk balance, Paulson said downside risks to the labor market are “slightly higher than” those of sticky inflation. She pointed out recent job growth has been heavily concentrated in healthcare and social assistance, and the labor market’s cooling has exceeded expectations. Any sign of a shift from “slowing” to “collapse” would be a major warning flag. Overall, Paulson is viewed as a dovish FOMC member, but her stance emphasizes “patience and data dependence”—prioritizing guarding against labor market disruption while ensuring inflation returns to target.