Philadelphia Fed's New Chair: No rush to cut interest rates, employment risk is key

【BlockBeats】The new Chair of the Philadelphia Fed, Paulsen, recently gave interviews to national media, and the core message is clear: now is not the time to rush into rate cuts.

Her logic is straightforward. The current interest rate level is still slightly above the comfortable neutral zone, which is conducive to further lowering inflation—aiming to return to 2%. The January meeting decided to keep rates unchanged, and she expressed satisfaction with that. The confidence behind this stance is that inflation should make substantial progress this year.

But when it comes to whether to cut rates in the second half of the year, Paulsen defers to the data. Two key variables to watch are: first, whether inflation truly eases as expected; second, whether the labor market will suddenly collapse.

A detail worth noting is that Paulsen is more concerned about employment. She pointed out that recent employment growth has been mainly concentrated in healthcare and social assistance, and the cooling of the entire labor market has exceeded expectations. If this shifts from “slowing” to “collapsing,” it would be a dangerous signal. In other words, she believes employment risks are higher than sticky inflation risks.

Overall, Paulsen is considered a relatively dovish moderate within the FOMC, but she is not someone who blindly cuts rates. She emphasizes “patience + data-driven” — ensuring inflation returns to target while preventing disorder in the employment market. For crypto asset allocators, this means the rate cut cycle may come later than the market previously expected, and the pace of risk asset rebounds needs to be reassessed.