Fed Speak: Goolsbee calls CPI 'borderline disturbing,' Paulson backs gradual tightening

Federal Reserve Bank of Philadelphia President Anna Paulson has stated that the central bank must continue raising interest rates to combat persistent inflation. Speaking at the 81st Annual Field Meeting Capstone gathering in Conshohocken, Pennsylvania, Paulson emphasized the need for gradual tightening of monetary policy.

Paulson maintained that higher interest rates are necessary to bring inflation back to the Federal Reserve's target of 2 percent. Inflation rates have remained above this target for over five years, with underlying inflation hovering between 2.5% and 3%.

The Fed President, who votes on the rate-setting Federal Open Market Committee this year, prioritized inflation control as her top concern. She acknowledged the economy's unexpected strength and a stable job market, but highlighted that inflation pressures are still prevalent.

Paulson attributed the rising inflation to tariffs, energy prices, and investment in artificial intelligence. In September, the central bank increased rates by 25 basis points for the first time in three years, with Chair Kevin Warsh reaffirming the Fed's commitment to its 2% inflation target.

According to market projections, there is an 88.8% chance that the central bank will raise rates by another 25 basis points in December, as indicated by CME Fedwatch.