# Philadelphia Fed's Paulson Signals Further Rate Hikes Needed to Curb Inflation Fed official warns inflation remains stubbornly high despite recent moderation in price pressures. - **Source:** [US Top News and Analysis](https://brifing.si/source/635540e9-943e-450d-ae52-ae0bfe3b67eb) - **Published:** 2026-09-24 - **Topic:** [Finance](https://brifing.si/c/finance) - **Original article:** - **On Brifing:** https://brifing.si/s/9d4d8b20-e495-4ac1-8bf0-b025bd07b3a4 ## Inflation remains elevated Philadelphia Fed President Anna Paulson stated underlying inflation persists at 2.5%-3%, significantly above the Fed's 2% target. While summer showed some price pressure moderation, the gap shows no signs of closing. Paulson noted inflation has remained high even excluding oil shocks from geopolitical tensions and tariffs, indicating broader price stability challenges. ## Current policy stance The Federal Open Market Committee recently raised benchmark rates by 25 basis points to 3.75%-4%. Paulson believes this brings policy closer to levels needed to return inflation to target, but maintains the current range still balances inflation control with labor market risks. The Fed's gradual approach reflects concern about overtightening amid economic uncertainty. ## Future tightening expectations Paulson suggested additional modest rate increases may be warranted if economic conditions evolve as expected. Markets now price a 64% chance of another hike in October, with expectations extending into 2024. Fed funds futures imply rates could reach 4.8% by 2027, suggesting up to four more quarter-point increases ahead as inflation proves persistent. ## Market reactions Treasury yields have surged to 2004 highs as investors adjust to prolonged tightening expectations. The CME Group's FedWatch tool shows traders anticipating consecutive hikes through January. This repricing reflects growing consensus that inflation will require sustained higher rates, despite potential economic slowdown risks from aggressive monetary policy. ## Economic context Outside inflation concerns, Paulson noted solid economic output and steady labor market conditions. This dual strength gives the Fed room to prioritize price stability. However, the extended tightening cycle raises questions about when cumulative rate impacts might begin affecting employment and growth more significantly. ## Policy divergence New York Fed President John Williams separately suggested another hike likely this year, indicating unified Fed messaging. The coordinated stance contrasts with earlier 2023 when some officials advocated pausing. Current unanimity reflects inflation's stubbornness and the priority of anchoring expectations, even at growth's expense. ## Historical perspective The potential 4.8% terminal rate would mark the highest level since 2007, underscoring inflation's persistence. While recent hikes have been smaller than 2022's aggressive moves, their cumulative impact approaches historically restrictive territory. This gradual but extended tightening represents a middle path between shock treatment and complacency. ## Forward-looking challenges The Fed faces delicate calibration between overtightening and insufficient action. Paulson's remarks highlight policymakers' data-dependent approach, weighing each increment carefully. With inflation proving stickier than hoped, the central bank appears prepared to tolerate slower growth to achieve price stability, prioritizing long-term economic health over short-term comfort. ## Sources covering this story - https://www.cnbc.com/2026/09/24/philadelphia-feds-anna-paulson-says-modest-rate-moves-likely-ahead-to-tame-inflation.html — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._