Philadelphia Fed President Paulson Indicates Potential Rate Adjustments Later in 2026

Federal Reserve Bank of Philadelphia President Anna Paulson indicated that additional rate cuts may be considered later in 2026, depending on economic developments. Speaking at the 2026 Allied Social Science Associations Annual Meeting in Philadelphia, Paulson projected inflation moderation, labor market stabilization, and economic growth around 2% for the year. She stated that if these conditions materialize, "some modest further adjustments to the funds rate would likely be appropriate later in the year."

Paulson noted that the current federal funds rate remains slightly restrictive and continues to exert downward pressure on inflation. She emphasized the importance of monitoring both supply and demand factors affecting the labor market, which, while showing signs of deceleration, is not breaking.

In 2025, the Federal Open Market Committee reduced the interest rate target by 75 basis points over three separate 25 basis point cuts, bringing the target range to 3.5%–3.75% as of December. Paulson, who assumed her role as president and CEO of the Philadelphia Fed on July 1, 2025, will have a vote on the FOMC this year.