New Federal Reserve voting member: Not in a hurry to cut interest rates; employment risks outweigh inflation risks

On January 16, newly appointed Philadelphia Fed President and 2026 FOMC voting member Anna Paulson stated in her first national media interview that there is no need to rush to cut interest rates at the moment and clearly expressed support for Federal Reserve Chair Powell’s leadership and the central bank’s independence. Paulson said that the current interest rate level remains slightly above the neutral zone, which helps to continue pushing inflation back down to the 2% target. She is “satisfied” with the decision to keep rates unchanged at the January meeting. She expects substantial progress on inflation within the year, but whether to cut rates later this year will depend on two factors: first, whether inflation continues to ease as expected; second, whether the labor market experiences unexpected deterioration. Regarding risk trade-offs, Paulson believes that the downside risk to the labor market is “slightly higher than” the risk of inflation stickiness. She pointed out that recent employment growth has been highly concentrated in healthcare and social assistance, with the cooling of the labor market exceeding expectations. Any signs of moving from “slowing” to “collapse” would be an important warning signal. Overall, Paulson is viewed as a dovish member within the FOMC, but her stance emphasizes “patience and data dependence,” prioritizing the prevention of disorderly risks in the labor market while ensuring inflation returns to the target.