Fed's Mousalem: Unwilling to Support Further Rate Cuts

Odaily News: On Friday, Federal Reserve official Mousalem stated that given inflation has consistently exceeded the Fed's 2% target level, he is reluctant to support further rate cuts. Mousalem expressed agreement with the Fed's decision to keep interest rates unchanged this week, believing 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 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 backfire. He stated that such a move might raise concerns about future inflation and push up long-term interest rates, which are important factors determining mortgage costs and corporate borrowing costs.