Federal Reserve Bank of Philadelphia President Anna Paulson said on Tuesday it was 'healthy' for financial markets to consider scenarios where the U.S. central bank may need to raise interest rates again.
Speaking at the 2026 Financial Markets Conference in Amelia Island, Florida, Paulson said inflation remained 'too high' and warned that rising energy costs linked to the Middle East conflict, along with tariffs and supply disruptions, had increased upside risks to prices.
'I think it is healthy that market participants have taken on board scenarios where the funds rate remains unchanged for an extended period, as well as scenarios where further tightening becomes necessary,' Paulson said.
Still, Paulson emphasized that she believes policy is currently 'in a good place,' describing the Fed's stance as 'mildly restrictive' and sufficient for now to contain inflation pressures while maintaining a stable labor market.
