Fed's Paulson says she is approaching December rate decision cautiously

Philadelphia Federal Reserve President Anna Paulson said that she is approaching December’s policy meeting “cautiously,” adding that the central bank must carefully balance slowing labour momentum against lingering inflation risks.

Key quotes

Rate cuts so far have been appropriate, but each raises the bar for the next cut.

With upside risks to inflation, downside risks to employment, monetary policy must walk a fine line.

On the margin still more worried about labor market than inflation.

Expect to learn a lot between now and December Fed meeting.

US Economy doing ok. 

In thinking about monetary policy over the longer arc, focused on balancing inflation, labor market risks.

Bifurcation in economy may have intensified, lower- and moderate-income households struggling.

September labor market report 'encouraging' on balance.

Tariff effects smaller than feared, overall demand environment helping to keep a lid on inflation.

Aggregate growth more dependent than usual on highest earners, growth outlook particularly sensitive to equity valuations.

Market reaction

At the time of writing, the US dollar Index (DXY) is trading around 100.15, down 0.06% on the day.