“In the U.S. Federal Reserve, which acts as the central bank, a ‘hawkish’ official focused on controlling inflation has warned that the risk of underestimating the impact of tariffs on inflation exists and now is not the time to consider lowering interest rates.”
“Alberto Musalem, President of the Federal Reserve Bank of St. Louis, stated in a speech at the Economic Club of Minnesota that while U.S.-China trade tensions have somewhat eased, tariffs are still burdening the U.S. economy.”
“He specifically highlighted that given the possible short-term economic contraction and labor market deterioration, rapidly introducing easing policies amid rising expected inflation and supply chain reorganization is dangerous.”
“He further emphasized that the Federal Reserve’s top priority should be price stability in the context of long-term inflation risks, and that a cautious approach avoiding rate cuts should be maintained for the time being.”
“He warned that although employment is showing resilience and inflation, while exceeding the 2% target, is on an improving trend, uncertainty remains extremely high regarding other policy variables such as immigration, finance, and regulation.”
“Additionally, he explained that the effects of tariffs on inflation could be temporary or persistent, viewing the possibilities as equally likely.”
“President Musalem, who is very cautious and has a hawkish focus on suppressing inflation, is a voting member of this year’s Federal Open Market Committee (FOMC) that decides monetary policy.”
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