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.
This article was written by Greg Michalowski at www.forexlive.com.
