Fed's Musalem: Current Interest Rate Setting Remains Appropriate

Odaily News According to a report from Jin10, St. Louis Fed President Musalem stated on Wednesday that the Federal Reserve's current interest rate stance may remain appropriate for the foreseeable future. He indicated he might support either the next rate cut or hike depending on economic developments. Musalem noted that the Fed's interest rate target of 3.5%-3.75% represents a good balance in the face of risks such as persistent inflation and a labor market showing signs of fragility in recent months. This target rate may be at the lower end of the neutral range, suggesting that further rate cuts by the Fed could inadvertently push inflation higher. Musalem pointed out, "Policy is well-positioned to address the risks to the dual mandate, and I expect the current level of the policy rate to remain appropriate for some time." He stated that if the labor market weakens and a rate cut does not undermine the Fed's credibility in fighting inflation, he could ultimately support further easing. However, he also added that if inflation rises or the public loses confidence in the Fed's ability to manage inflation, he could support a rate hike.