Fed’s Paulson signals patience on rate cuts amid economic reassessment

Paulson's Views on Rate Cuts

Paulson spoke on Saturday in the US, suggesting that further rate cuts may be delayed. She anticipates moderating inflation and a growth rate of around 2% for 2026. The current policy rate is seen as 'slightly restrictive', exerting downward pressure on inflation, while the labor market remains resilient despite signs of slowing. Paulson indicated that any potential easing later this year would be data-dependent, highlighting a careful approach as the economy evolves post the previous easing cycle. Following the last FOMC meeting, the federal funds rate remains in the 3.5%-3.75% range, which she believes contributes to controlling inflation. Balancing these factors is crucial for the Fed amid political pressures. Her cautious optimism regarding inflation, in light of price adjustments, will require close monitoring of employment conditions and how economic fluctuations influence the Fed’s future decisions.