Fed Musalem reminds us before “adjusting” fees
St. Louis Fried President Alberto Musalem appeared on Thursday Latest Central Bank Officer taking notesairs concerns about inflation in talks about higher tariffs and changes in immigration policies from the Trump administration.
“I think it would be appropriate to monitor the economic situation and outlook before further adjusting the policy stance,” Musalem said in a speech at the Economic Club in New York.
The Fed held back interest rates at last month’s meeting after three consecutive cuts as central bankers became more cautious about future paths for inflation.
After a full point of easing, the rates have become “conservatively restrictive” and “less meaningful limits” than six months ago, Musalem said.
To lower the rate, Musalem said he wanted to increase his confidence that there is inflation on the downward trajectory towards the Fed’s target of 2%.
read more: How Fed rate decisions affect bank accounts, loans, credit cards and investments
However, he added that the risk that inflation could stall progress is now greater than the risk of substantial weakening in the job market.
He added that if higher inflation continues as a result of policy or long-term inflation expectations, it may be appropriate to maintain a “more restrictive path to monetary policy.”
a Hotier than expected January’s inflation reading from the Consumer Price Index (CPI) made the Fed much more likely to hold interest rates in the near future.
On a “core” basis, which removes more volatile costs of food and gas, prices in January rose 0.4% from the previous month. This is the largest monthly increase since April 2023, exceeding 0.2% of each month in December.
read more: Work, inflation, and the Fed: how they are all related
Core CPI prices also rose 3.3% last year, up from 3.2% seen in December.
The latest reading from the “core” Personal Consumption Expense (PCE) index, the Fed’s priority inflation target, is due to be released next week.
Chicago Federal President Austan Ghoolsby said Thursday that he is not as “serene as CPI’s reading.
“The CPI number wasn’t very big,” Goolsbee said at a Chamber of Commerce event in Chicago. “The PCE number probably isn’t too big yet, but it’s not as calm as the CPI number.”
Atlanta Federal Reserve President Rafael Bostic told Yahoo Finance on Wednesday that interest rate cuts are still on the table this year, but following a higher than expected CPI reading from January, “The biggest problem right now is , I think it’s whether that data point represents a new trend or just a rise in the road.”