Fed’s Musalem backs rate hikes, says inflation remains too high

The St. Louis Fed President, Alberto Musalem, stressed that “inflation is too high” and that it’s “critical” that monetary policy focuses on bringing down inflation.

Musalem revealed that he supported increasing rates at the recent monetary policy meeting and that he sees a higher probability that inflation would remain above target. He added that “incremental rate hikes are less costly than sudden changes,” and expects core inflation to be “probably” between 2.5% and 3%.

He added that the labor market is not an inflation driver and that he was very receptive at new Fed Chair Kevin Warsh task forces.