Anna Paulson, a policymaker at the Federal Reserve Bank of Philadelphia, said modest increases in interest rates are likely as officials continue efforts to return inflation to the Fed's 2% target. Paulson told reporters and market participants that she and her colleagues may need to take additional steps to tighten policy if inflation does not move decisively toward the objective.
Her comments underscore a cautious posture among Fed officials who have signaled they are prepared to act further if inflation remains elevated. By describing future moves as "modest," Paulson suggested a preference for gradual adjustments rather than large, abrupt rate hikes.
The remarks come as the Federal Open Market Committee monitors incoming economic data to decide on the appropriate path for monetary policy. Policymakers balance the goal of restoring price stability with risks to economic growth and the labor market, and Paulson's statements reflect that deliberative approach.
Markets and observers will be watching upcoming data releases and Fed communications for signals about timing and magnitude of any additional rate increases. Paulson's acknowledgement that further tightening may be necessary adds to the careful, data-dependent message officials have conveyed in recent weeks.