Fed's Mousalem: Unwilling to Support Further Rate Cuts

Odaily News Fed's Mousalem said on Friday that given inflation has consistently exceeded the Fed's 2% target, he is reluctant to support further rate cuts. Mousalem stated that he agrees with the Fed's decision this week to keep interest rates unchanged and believes that with rates between 3.5% and 3.75%, the Fed's target rate is no longer high enough to significantly restrain the economy. Persistent price increases should prevent the Fed from lowering rates to support the economy. Mousalem said, "Given that inflation is above target and the risks to the economic outlook are roughly balanced, I believe it is not appropriate to lower rates into accommodative territory at this time." Mousalem also noted that attempting to ease labor market pressures by lowering the short-term rates controlled by the Fed could be counterproductive. He stated that such a move might raise concerns about future inflation and push up long-term rates, which are a key factor in determining mortgage costs and corporate borrowing costs.