Federal Reserve Bank of Philadelphia Governor Anna Paulson said on Friday that she expects inflation to cool down next year, but also warned of the risk that the labor market may weaken further. Paulson said at the Delaware Chamber of Commerce event: “Overall, I am still more concerned about a weak labor market compared to the upward risk of inflation. This is partly because I think inflation is likely to fall back as we move into next year.” The impact of tariffs on commodity prices should gradually subside by the middle of next year, she said. Paulson described the labor market as “bending, but not broken,” and cautioned that recruitment is concentrated in industries such as healthcare and social services, indicating that broader recruitment is still weak. “The current state of the labor market is OK, but downside risks are rising,” she said. Paulson said she still believes that monetary policy is tight to a certain extent, but recent easing will provide some buffer to the job market.

Federal Reserve Bank of Philadelphia Governor Anna Paulson said on Friday that she expects inflation to cool down next year, but also warned of the risk that the labor market may weaken further. Paulson said at the Delaware Chamber of Commerce event: “Overall, I am still more concerned about a weak labor market compared to the upward risk of inflation. This is partly because I think inflation is likely to fall back as we move into next year.” The impact of tariffs on commodity prices should gradually subside by the middle of next year, she said. Paulson described the labor market as “bending, but not broken,” and cautioned that recruitment is concentrated in industries such as healthcare and social services, indicating that broader recruitment is still weak. “The current state of the labor market is OK, but downside risks are rising,” she said. Paulson said she still believes that monetary policy is tight to a certain extent, but recent easing will provide some buffer to the job market.