The warnings follow a September rate hike that Paulson said was driven by inflation reports and improved the central bank's inflation-fighting posture. The Fed's dot plot reinforces this hawkish shift, with 16 of 18 officials expecting at least one more hike in 2026. Market expectations have responded, as Kalshi's forecast for the number of rate hikes this year climbed to 2.4 from approximately 2.1 earlier in the week.
Wednesday, October 21, 2026
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Fed's Paulson and Williams Warn of More Rate Hikes to Curb Inflation
US Markets26 days ago
Federal Reserve officials Anna Paulson and John Williams noted that additional interest rate hikes might be necessary to drive inflation down to the 2% target. Paulson, president of the Philadelphia Fed, suggested that modest further tightening could be warranted, while Governor Williams said another hike by the end of the year appears reasonable. Paulson identified AI investment as a contributor to inflationary pressure, though she characterized the labor market as stable and the broader economy as resilient.
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