The black swan flapped its wings, and the markets took note

FED’S PAULSON: FAVORS GRADUAL PATH OF RATE CUTS OVER THIS YEAR INTO NEXT Paulson: Economic Outlook Good afternoon, everyone, and thank you, Greg, for that very kind introduction. It is a pleasure to welcome you all to Philadelphia for this year’s NABE Annual Meeting. I’m especially glad to be here with all of you — people who think deeply about the economy and how economic developments impact families, businesses, and communities across the country. As an economist, I’ve learned as much from direct conversations with some of those families, businesses, and communities as I have from studying data and models. That’s why I feel such a strong connection to NABE and the work that you all do. As you know, the Federal Reserve System is committed to serving the public by fostering conditions that lead to stable prices and maximum employment. As president of the Philadelphia Fed, I look deeply and widely at the economic data and complement that with perspectives I’ve gained from talking directly with people in the communities we serve. Those conversations allow me to bring regional insights to our broader analysis of the economy and monetary policy. And they help me to keep front of mind the ways in which Federal Open Market Committee (FOMC) decisions impact all of us. FED’S PAULSON: UNCLEAR WHAT NEUTRAL RATE IS, ARGUES FOR CAUTION IN RATE CUT PACE || SEPTEMBER FED RATE CUT SIZE ‘MADE SENSE’ || EXPECTS TARIFFS TO PUSH UP INFLATION BUT WON’T CAUSE PERSISTENT INCREASE Fed's Paulson: I see current monetary policy as modestly restrictive.