The Fed's Musalem:

  • I could support a path with another cut if more risk to jobs emerge and inflation remains contained
  • Fed should not be on a preset course, and followed balance approach
  • Sees limited space before rate cuts would make policy accomodative
  • Important for the Fed to be cautious right now
  • Does not make decisions on one data point amid broader shutdown.
  • Important for the Fed to go meeting by meeting on policy deliberation
  • Weare in a particulary uncertain moment
  • It is premature what to say comes with FOMC meetings after October
  • Tariff impact still flowing into the economy
  • Tariffs will work through the economy into the middle of next year
  • Retailer are feeling increased pressure to pass on tariffs
  • Consumers facing firms facing more trouble passing throuh tariffs
  • Purchasing power still an issue for many Americans
  • Inflation is still a very big thing for consumers
  • it is really important for the Fed to get inflation back to 2%.
  • Some are saying non-interest rate related costs matter more right now.
  • Tariffs don't appear to be passing through to services.
  • Services inflation has been at high level, need more work to lower.
  • He is totally committed to a target of 2%, believes Fed supports the same.
  • By 2nd half of 2026 will move back toward 2% inflation, but needs policy to lean against inflation.
Source: Investing Live