Federal Reserve Bank of Philadelphia Governor Anna Paulson said interest rates may need to be raised further to ensure that the inflation rate returns to the central bank's target level of 2%. “Looking ahead, if the situation develops according to my expectations, a further slight tightening of policy may be appropriate,” Paulson said in a speech prepared for an event in Philadelphia on Thursday. Federal Reserve officials voted unanimously last week to raise the benchmark interest rate to the 3.75%-4% range. This is the first rate hike since 2023. Paulson, who has the right to vote on monetary policy this year, said that this rate hike is necessary because the basic inflation index excluding energy and food prices still “remains stubbornly high.” “This adjustment brings the policy closer to what I think is needed to pull the inflation rate back to 2% while balancing inflation and labor market risks,” she said. Paulson said that the US economy is still showing resilience in the face of shocks, output growth is steady, and the labor market is close to full employment. She said she is seeing signs of “increasing momentum” in the economy.

Federal Reserve Bank of Philadelphia Governor Anna Paulson said interest rates may need to be raised further to ensure that the inflation rate returns to the central bank's target level of 2%. “Looking ahead, if the situation develops according to my expectations, a further slight tightening of policy may be appropriate,” Paulson said in a speech prepared for an event in Philadelphia on Thursday. Federal Reserve officials voted unanimously last week to raise the benchmark interest rate to the 3.75%-4% range. This is the first rate hike since 2023. Paulson, who has the right to vote on monetary policy this year, said that this rate hike is necessary because the basic inflation index excluding energy and food prices still “remains stubbornly high.” “This adjustment brings the policy closer to what I think is needed to pull the inflation rate back to 2% while balancing inflation and labor market risks,” she said. Paulson said that the US economy is still showing resilience in the face of shocks, output growth is steady, and the labor market is close to full employment. She said she is seeing signs of “increasing momentum” in the economy.