Newly appointed Philadelphia Fed Chairman speaks publicly for the first time, supporting two more interest rate cuts this year.

Anna Paulson, President of the Federal Reserve Bank of Philadelphia, stated on Monday that she leans towards implementing two more 25 basis point rate cuts this year, and pointed out that monetary policy should "ignore" the short-term price increase effects caused by tariffs, as such shocks are unlikely to evolve into sustained inflation. Paulson said, "I have not seen conditions that would turn the tariff-induced price increases into sustained inflation, especially in the current labor market environment." She noted that the 25 basis point rate cut conducted by the Fed last month "was reasonable," and that current monetary policy is still "moderately tight," so further easing is in line with the latest Summary of Economic Projections (SEP) by the Fed. According to the median expectation in the September SEP, Fed officials expect to cut rates twice more this year. This is the first time Paulson has publicly discussed the economic situation since taking office as President of the Philadelphia Fed in July. She stated that if the economic trend follows expectations, policy adjustments this year and next will be sufficient to keep the job market close to full employment levels. Paulson pointed out that while most members of the policy committee support further rate cuts to support employment, some officials are cautious, believing that inflation is still above the 2% target, and hasty easing may bring risks. Regarding inflation outlook, Paulson expects slight price increases in commodities in the coming quarters, but long-term inflation expectations remain stable, with no "worrisome spillover effects" appearing yet. She also warned that the recent slight increase in the unemployment rate indicates that labor market momentum is "weakening." Paulson said that the U.S. economy is expected to maintain above-trend growth in the third quarter, exceeding market expectations from the second quarter. However, she warned that the growth foundation is narrowing, with consumption increasingly dependent on spending by high-income households, which to some extent benefited from the stock market boom driven by a few artificial intelligence-related tech giants. "Some business contacts are beginning to worry about where future demand will come from," she said, "this is something we need to closely monitor."