St. Louis Fed President Alberto Musalem said on Friday he will need more data before deciding to support a rate cut at the Fed’s September 16-17 meeting given that inflation is above the Fed’s 2% target and is expected to move higher, while risks to the job market have yet to be realized.
“It is real that inflation is running closer to 3% than to 2%. That’s real, and there is a possibility, not the base case, that there could be some persistence,” Musalem told Reuters. “So that’s one risk against the unrealized risk, not real yet, of a potential labor market deterioration.”
“Policy now is in the right place for a full employment labor market and inflation running above target. It’s in the right place … to be leaning against inflation,” Musalem said. “But that’s at a full employment labor market. If you happen to assess there’s risk to the labor market, then that initial policy setting needs to be adjusted.”
“I will be updating my outlook and balance of risks all the way up and until two days, three days before the meeting,” he said. “Then I’m going to decide.”