Fed’s Musalem warns inflation to remain elevated for coming quarters

Investing.com -- St. Louis Federal Reserve President Alberto G. Musalem stated Monday that short-term inflation expectations remain somewhat high, though long-term expectations are anchored.

Musalem projected that inflation will stay elevated for the next two or three quarters. He noted that risks to labor market weakening have increased.

Regarding monetary policy, Musalem described the current stance as between modestly restrictive and neutral. He expressed openness to future potential rate cuts but emphasized the need for caution, warning there is "limited room before policy becomes too loose."

On the impact of tariffs, Musalem indicated their effect has been more muted than anticipated, estimating they account for perhaps only 10% of current inflation.

The St. Louis Fed President stressed the importance of countering above-target inflation regardless of its source.

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