Philadelphia Fed president says more rate hikes may be needed to hit 2% inflation target

The Federal Reserve’s inflation fight just got a fresh chapter. Anna Paulson, president and CEO of the Federal Reserve Bank of Philadelphia, said on September 24 that additional interest rate increases may be necessary to drag inflation back to the central bank’s 2% target. Paulson endorsed the FOMC’s recent quarter-point rate hike, which pushed the federal funds target range to 3.75%-4.00%. She noted that underlying inflation is currently running between 2.5% and 3%. The case for more tightening Paulson indicated that should economic conditions continue to evolve along current projections, “additional modest rate tightening could be warranted.” The inflationary pressure isn’t coming from a single source. Paulson pointed to import tariffs as one driver, raising prices on goods flowing into the US economy. Energy prices are another factor, with geopolitical tensions involving the US and Israel creating supply-side pressures. Strong investment in AI and technology infrastructure has been fueling demand in certain sectors, adding another dimension to the inflation picture. Recent Fed forecasts from the latest meeting suggest one more rate hike could arrive before the end of 2026. Futu...