Philadelphia Fed President believes inflation expectations face greater upside risks

MaticHoleFiller · 2026-04-02T01:37:32+00:00

Philadelphia Federal Reserve President Anna Paulson pointed out that rising commodity prices due to high inflation and the Middle East conflict could pose greater risks to the U.S. economy. She is concerned that rapidly increasing fuel and fertilizer prices may exacerbate inflation, but a steady labor market could help contain inflation.

MaticHoleFiller

2026-04-02 01:37:32

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Philadelphia Fed President Anna Paulson said that risks to the U.S. economy from a surge in commodity prices driven by the Middle East war are greater, given that inflation has remained high for years.

“Rising fuel prices and fertilizer prices pose faster and potentially more persistent risks in how they feed into inflation expectations,” Paulson said Friday at an event hosted by the Federal Reserve Bank of San Francisco. “I am concerned about this.”

At the same time, Paulson pointed out that a subdued labor market could help curb inflation.

“To turn these shocks into truly persistent inflation, you need mechanisms that allow them to keep operating,” she said. “As for wage setting, it currently doesn’t seem like there’s much incentive to make that happen.”

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