Philadelphia Fed Pres Paulson (voter in 2026): see inflation moderating, the labor market stabilizing and growth coming in around 2% this year. If all of that happens, then some modest further adjustments to the funds rate would likely be appropriate later in the year
- I view the current level of the funds rate as still a little restrictive
- I see a decent chance that we will end the year with inflation that is close to 2% on a run-rate basis, as tariff-related price adjustments will likely be completed
- While the labor market is clearly bending, it is not breaking; I see the broad deceleration in the labor market as stemming from both supply and demand factors
- Baseline outlook for the economy is pretty benign
- Fed could cut rates again later this year if the economy stays benign