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St. Louis Fed President Musalem backs rate hikes, flags sticky inflation

Musalem said inflation is likely to stay above target, with core inflation “probably” between 2.5% and 3%.

Reported · Written up by our desk · Central Banks

St. Louis Fed President Alberto Musalem said inflation is still too high and that monetary policy should stay focused on bringing it down, adding that he supported increasing rates at the most recent policy meeting.

FXStreet reports Musalem also indicated he sees a higher probability that inflation will remain above target, while arguing that incremental rate hikes are less costly than sudden policy changes.

He expects core inflation to be “probably” between 2.5% and 3%, and said the labor market is not an inflation driver.

Musalem further noted his receptiveness to work from new Fed Chair Kevin Warsh task forces, underscoring that the Fed’s mandate is price stability and full employment.

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