Federal Reserve's new voting member Paulson: Rate cuts can wait, employment is more concerning than inflation

Paulson hinted that she agrees with the mainstream view that there is no rush to cut interest rates again. Paulson will become a voting member on interest rates this year, and she supports the Federal Reserve's decision to lower rates in the last three meetings.

She stated that she expects meaningful progress towards the central bank's 2% inflation target by the end of this year, but she is satisfied with maintaining interest rates steady at the upcoming Federal Reserve meeting on January 27-28. She believes that rates are still sufficiently high, slightly above the neutral level that neither stimulates nor suppresses growth, and indicated that maintaining this level is appropriate to help achieve the goal of reducing inflation.

At the same time, Paulson mentioned that she may lean towards a moderate rate cut later this year, provided that either the inflation data confirms her expectations—indicating that price pressures are easing—or there is evidence showing that the labor market is unexpectedly deteriorating.