Fed’s St. Louis President Alberto Musalem Says More Rate Hikes Likely Needed

Musalem said that achieving the 2 % inflation goal within roughly 18 months “requires more monetary policy firming.” He projected that rates might need to rise again within the next six to nine months, but he declined to state a position on the October 27-28 policy meeting.

Fed’s Musalem Sees Potential Rate Hikes Within Six to Nine Months

On September 15-16, the Federal Reserve raised its policy rate to a range of 3.75 %-4.00 % in an effort to curb inflation. Inflation remains above the Fed’s 2 % target, which Musalem identified as “the economy’s primary problem.” He argued that strong economic growth and a stable labor market could allow the Fed to lower inflation without harming employment.

Fed’s Musalem Sees Potential Rate Hikes Within Six to Nine Months Reuters

Traders have priced the October meeting as a likely hold, keeping the policy rate in the 3.75 %-4.00 % band. Market participants now anticipate the next increase in December, aligning with Musalem’s view that further tightening may be required later in the year.

Reuters

Musalem warned that “the US federal government has been on an unsustainable fiscal path now for the better part of two decades,” adding that heavy borrowing could pose risks to the broader economy. He emphasized that the primary challenge is inflation, but he believes the Fed can lower it without denting hiring.

Reuters

• “To bring inflation back to target in a timely manner, more monetary policy firming will be required,” — Alberto Musalem, federal reserve president

Reuters

• “I go into every meeting with a very open mind, and I haven't prejudged what the outcome of that meeting is going to be, or what I'm going to do at that meeting,” — Alberto Musalem, federal reserve president

Reuters

• “The US federal government has been on an unsustainable fiscal path now for the better part of two decades,” — Alberto Musalem, federal reserve president

Reuters