Fed’s Musalem Signals Need for Further Rate Hikes Amid Elevated Inflation
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- Musalem: Inflation requires further rate hikes; economy strong.
- Rates may rise over six-to-nine months to hit 2% target.
- St. Louis Fed’s Musalem stops short of endorsing October hike.
St. Louis Federal Reserve President Alberto Musalem indicated that more monetary policy firming will be necessary to bring inflation back to the central bank’s 2% target. Speaking on Thursday, Musalem suggested that interest rates should increase over the next six-to-nine months. He highlighted that the economy remains robust, allowing the Fed to prioritize addressing elevated inflation, which he noted is a primary concern for businesses in his district, rather than job market stability. Musalem also affirmed his approach of attending all policy meetings with an open mind.
St. Louis Fed President Alberto Musalem indicated that interest rates would likely need to increase over the next six to nine months to bring inflation down in a timely manner. Musalem warned against a broader resurgence in inflation, even as the U.S. economy remains strong. Speaking at the Future of Fixed Income conference in New York, he clarified that he goes into every meeting without prejudging the outcome and stopped short of endorsing a rate hike at the Fed’s October meeting.