On January 5, Anna Paulson, a newly elected voting member of the Federal Reserve in 2026 and president of the Philadelphia Federal Reserve, stated that if the economic outlook remains benign, a modest additional rate cut later in 2026 might be appropriate. "I expect inflation to moderate, the labor market to stabilize, and economic growth to be around 2% this year. If all of these occur, then some modest further adjustments to the federal funds rate later this year would likely be appropriate."
Anna Paulson also stated that the risks in the labor market remain high, with the slowdown in labor demand exceeding the supply contraction caused by the Trump administration's immigration crackdown. "While the labor market is clearly under pressure, it hasn't collapsed."
