Source: Wall Street See

On Wednesday, FOMC voting member and St. Louis Fed President Alberto Musalem stated that, in the context of inflation being higher than expected and concerns in the labor market diminishing, it may be time for policymakers to slow the pace of interest rate cuts.

Musalem indicated that over time, continuing to lower interest rates may be appropriate, but he supports a patient approach and stated that the risks of cutting rates too quickly outweigh the risks of being too cautious.

"Maintaining policy options seems important, and it may be time to consider slowing the pace of interest rate cuts or pausing rate cuts to carefully assess the current economic environment, upcoming information, and the changing outlook."

Musalem also reiterated that the Fed is close to achieving its goals of employment and price stability, and monetary policy is well positioned.

Musalem: Inflation is expected to approach the 2% target in the next two years.

Since September, Fed officials have cut interest rates by 75 basis points. In the context of fluctuating inflation data and sustained positive signs in the labor market, some officials have called for cautious rate cuts.

Officials will hold the next meeting from December 17 to 18. Musalem stated that he expects inflation to align with the Federal Reserve's target of 2% over the next two years.

However, he added that the data released since September indicate that the risk of price increases "potentially stagnating or even reversing" is greater.

In addition, he stated that policymakers should proceed with caution because it is still unclear where the neutral interest rate lies. He also mentioned that it is uncertain whether productivity growth can be sustained.

Editor / jayden