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Interest Rates · November 11, 2026 · 2 min read

Paulson favors gradual tightening, with faster action tied to inflation risks

By Econ Data Tools Editorial Team

Published November 11, 2026 • Updated November 11, 2026

In November 10 remarks, the Philadelphia Fed president kept the policy path conditional. She said expectations were anchored and wage pressure limited, while naming changes that could justify moving faster.

Philadelphia Federal Reserve President Anna Paulson said in a November 10, 2026 economic-outlook speech that further gradual tightening appeared appropriate, while stressing that the exact path would depend on conditions. She described these as her own views, not necessarily those of other Federal Open Market Committee members or the Federal Reserve. The speech is not a new FOMC decision or a commitment to a particular December move. Paulson said she had supported raising rates in September and holding them in October. In her account, skipping a meeting concerned the pace of policy rather than its direction, with likely more work needed to return inflation to 2%. That is her assessment of the policy outlook, not a guarantee that every subsequent meeting will bring an increase. Her concern centered on underlying inflation, which she described as stuck between 2.5% and 3%. She distinguished that assessment from headline personal consumption expenditures inflation, which she put at 3.6% over the twelve months through September. Underlying measures and headline PCE refer to different concepts and should not be presented as the same inflation reading. Paulson identified tariffs, energy prices and the AI buildout as sources of price pressure, while saying tariff effects appeared to be fading. She also said wage growth was not currently adding to price pressures and long-term inflation expectations remained well anchored. Her discussion of isolated reports of larger wage increases was a risk to watch, not a claim that a broad wage surge was already visible in the data. She gave two reasons to move gradually when conditions allow: time for households, businesses and financial institutions to adjust, and time for policymakers to learn from incoming evidence. She said recent swings in stocks and oil, and consumer spending tied partly to market gains, could change the economic picture. Gradualism therefore remained conditional rather than a fixed timetable. Paulson said she would want to act more quickly if inflation expectations drifted higher, wage pressures built, or underlying inflation rose. She added that this was not what she was seeing at the time. Those triggers describe her response to possible future developments; they do not establish an agreed half-point increase, a market-implied probability or a predetermined rate path.

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