Philadelphia Fed President Anna Paulson said overnight that she is approaching the December FOMC “cautiously,” highlighting a delicate balance between a cooling but still-stable labor market and inflation that remains above target.
The delayed September jobs report was “encouraging,” she said, as it showed the rise in unemployment to 4.4% was largely consistent with softer labor supply, not a collapse in demand. That leaves the job market broadly in equilibrium.
Paulson stressed that the Fed must recognize how its easing cycle compounds over time. “Each rate cut raises the bar for the next cut,” she noted, because every move lowers policy closer to the point where it stops restraining the economy and begins actively stimulating it.
Regarding inflation, Paulson reiterated that tariffs are unlikely to generate sustained price pressures. The bigger driver remains moderating demand, which is helping contain inflation even as it remains above the 2% goal for what will likely be five consecutive years.
