Fed’s Paulson Sees Higher Risk to Inflation Expectations

Federal Reserve Bank of Philadelphia President Anna Paulson said the surge in commodity prices driven by war in the Middle East held more risk for the US economy due the fact that inflation has been elevated for years.

“There’s a little bit more of a risk that the transmission of higher fuel prices, higher fertilizer prices, into inflation expectations is faster and maybe a little bit more durable,” Paulson said Friday during an event organized by the San Francisco Fed. “I’m worried about that.”

At the same time, Paulson pointed out that the tepid labor market may work to hold ...