穆萨勒姆4月上任圣路易斯联储主席，明年将成为联邦公开市场委员会（FOMC）票委。穆萨勒姆说道：“对我来说，目前最重要的是松开刹车的脚踏板，就是逐步让货币政策减少限制性。”1. Mussalem told the media that the U.S. economy may have a 'very strong reaction' to overly loose financial conditions, which will stimulate demand and extend the time needed to bring inflation back to 2%; 2. He acknowledged that the U.S. labor market has cooled down in recent months, but given the low layoff rate and overall strong economy, he remains optimistic about the prospects.
After the first rate cut by the Federal Reserve in four years, St. Louis Fed President Alberto Musalem recently stated that the Fed should return to gradually lowering interest rates.
On Friday local time (September 27th), Mussalem told the media that the U.S. economy may have a 'very strong reaction' to overly loose financial conditions, which will stimulate demand and extend the time needed to bring inflation back to 2%.
Mussalem, who took office as St. Louis Fed President in April, will become a voting member of the Federal Open Market Committee (FOMC) next year. Mussalem said: 'For me, the most important thing right now is to release the brake pedal, which means gradually easing the restrictions on monetary policy.'
Last week, the Federal Reserve 'took a bold step' to start a period of monetary easing—cutting interest rates by 50 basis points instead of the more traditional 25 basis points, lowering the federal funds rate target range from 5.25% to 5.5% to 4.75% to 5%.
Federal Reserve federal funds rate target upper limit
This is also the first interest rate cut in four and a half years for the bank. At that time, Federal Reserve Chairman Powell explained during a press conference that this decision was made to avoid a soft labor market as inflation fell, to maintain the momentum of U.S. economic growth.
Although Mussallam is not on this year's rotating voting committee, he also supports starting rate cuts in September. He acknowledges that the labor market in the United States has cooled down in recent months, but due to low layoff rates and a strong overall economy, he remains optimistic about the outlook.
He stated that the commercial sector is in a 'good state', with business activities overall 'stable', and added that large-scale layoffs do not seem likely to occur quickly. However, he also acknowledges that the risks the Fed faces may require it to cut rates faster.
Mussallam said: 'I realize that the extent of economic weakness may exceed my current expectations, and the degree of labor market weakness may also exceed expectations. If that's the case, a faster pace of rate cuts may be appropriate.'
Previously, Fed Governor Christopher Wall mentioned that if the data weakens faster, he 'would be more actively cutting rates'. Mussallam stated that the risks of the economy shifting too quickly to weakness or heating up have now subsided, and the next rate decision will depend on the data at that time.
Mussallam also refuted the idea that the 50 basis point cut in September was a 'catch-up rate cut', pointing out that the speed of inflation decline is much faster than he expected.
Yesterday, the Personal Consumption Expenditures (PCE) Price Index for August released by the Bureau of Economic Analysis in the USA recorded a 2.7% annual rate, very close to the central bank's 2% target.
Editor/Rocky
