Federal Reserve Bank of St. Louis President Alberto Musalem believes that current interest rates are positioned appropriately around a neutral level, while inflation will ease toward the Fed’s target of 2% this year.
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“I see little reason for near-term further easing of policy,” he said, adding that inflation data released this morning is “encouraging.” In December, the Consumer Price Index (CPI) and core CPI rose by 2.7% and 2.6%, respectively, on an annual basis.
Musalem Sees Lower Inflation Risks, Emphasizes Fed Independence
Musalem added that the risk of higher inflation has eased, with current rates supporting the Fed’s dual mandate without over-stimulating or restraining economic growth.
Furthermore, Musalem stressed that the Fed should remain independent, as it leads to stable inflation and higher employment. “Central bank independence with respect to monetary policy is a valuable asset for a country,” he said.
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