St. Louis Fed president Alberto Musalem said Wednesday that there are “very plausible scenarios” that would influence the central bank to maintain interest rates. He added that economic risk has pivoted toward inflation over the labor market amid surging oil and gas prices.
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Trade QQQ with leverage“We have risks both on the employment side and on the inflation side,” said Musalem at the Mississippi Bankers Association 2026 Annual Convention. “In my understanding, risks have been shifting towards more risks on the inflation side.”
Musalem Signals No Rate Cuts Until Inflation Eases
In March, the Core Personal Consumption Expenditures Index, which is the Fed’s preferred inflation gauge, increased by 3.2% year-over-year, the highest growth since November 2023. Musalem added that the Fed may need to hold rates until inflation cools down to its target of 2%.
At the same time, Musalem noted that a deregulatory push from the Trump administration, AI, and a strong stock market are supporting the economy. These factors have offset the risks of tariffs and higher energy prices.