Anna Paulson, President of the Philadelphia Federal Reserve, stated that inflation is expected to make meaningful progress toward the central bank's 2% target by the end of this year, but she is satisfied with maintaining stable interest rates at the Federal Reserve's upcoming meeting on January 27-28. She believes that interest rates are still sufficiently high, slightly above the neutral level that neither stimulates nor restrains growth, and said that maintaining this level is appropriate at present and helps accomplish the task of reducing inflation.

“I hope the restrictive effect of monetary policy will work and lead us all the way back to the 2% target,” she said.

However, Paulson indicated that she might lean toward a moderate rate cut later this year, provided either inflation data confirms her expectations—that price pressures are easing—or evidence emerges that the labor market conditions are unexpectedly deteriorating.