Fed’s Anna Paulson Backs More Rate Cuts as Inflation and Jobs Slow

Federal Reserve Bank of Philadelphia President Anna Paulson has voiced support for additional interest rate cuts this year, reinforcing growing market expectations of another rate reduction at the upcoming October 29 FOMC meeting. Speaking at the National Association for Business Economics Annual Meeting, Paulson said she believes monetary easing consistent with the median Summary of Economic Projections is “appropriate,” emphasizing that the September 25-basis-point (bps) rate cut “made sense” amid softening economic conditions.

Paulson’s remarks follow the Fed’s first rate cut of 2025 in September, with most officials signaling two more 25-bps reductions before year-end. She explained that progress on inflation and emerging labor market risks justify further easing, noting that employment momentum appears to be weakening. Her stance aligns with that of several Fed policymakers—including Governors Michelle Bowman, Chris Waller, and Stephen Miran—who have also supported continued rate cuts in response to slowing job growth. However, Waller has urged a cautious approach, warning against overly aggressive monetary easing.

Addressing concerns about the inflationary effects of Trump’s tariffs, Paulson stated that while the tariffs may temporarily lift prices, they are unlikely to cause lasting inflationary pressure. She said monetary policy should “look through” these short-term price effects, adding that actual tariff impacts have been smaller than initially expected.

Paulson’s reassurance that tariff-related inflation is manageable adds confidence to the Fed’s dovish policy stance. Investors are now closely watching Fed Chair Jerome Powell’s upcoming speech on the economic outlook, which could offer further clues about the central bank’s path forward. With markets already pricing in another rate cut, optimism in the crypto market has surged, as lower interest rates often fuel risk-on sentiment and bolster digital asset demand.