Fed Hawkishness Intensifies as Schmidt and Paulson Warn Rates May Need to Rise Further

Fed Presidents Schmidt and Paulson signal potential tightening if inflation persists. Schmidt calls current policy insufficient, while Paulson links rate path to core inflation trends, citing AI and geopolitical risks.

Woofun AI reports that Federal Reserve officials Jeffrey Schmidt and Anna Paulson issued hawkish statements, indicating that monetary policy may require further tightening if inflation remains elevated. Schmidt characterized the current stance as "not restrictive," warning that supply shock pressures might persist and that the Fed must act to return inflation to its 2% target. Paulson emphasized that the future interest rate trajectory depends on core inflation trends, noting that recent declines are only modest progress. She highlighted that long-term elevated core inflation, currently ranging between 2.4% and 2.8%, remains a critical assessment factor. Both officials pointed to AI infrastructure investments and Middle East conflicts as potential sources of renewed price pressures.