St. Louis Fed Pres. Musalem (2025 voter) is speaking and says:
- Monetary policy is currently well-positioned
- Balanced response to higher inflation, unemployment feasible if inflation expectations stay anchored.
- If inflation expectations become unanchor, Fed policy should prioritize price stability.
- US economy has underlying strength, labor market stable, inflation east but above 2% goal.
- Economic policy uncertainty unusually high.
- Even after May 12 de-escalation, tariffs likely to lead to labor market softening, higher prices.
- Tariffs as likely to have temporary as persistent effect on inflation.
- If trade tensions are durably de-escalated, inflation could head back to target, labor market remain resilient, and current monetary policy would remain appropriate.
The major theme from Fed officials has revolved around “uncertainty” which in Fed policy terms, means policy is on hold.
This article was written by Greg Michalowski at www.forexlive.com.
