Fed's Musalem: Recent information suggests that the risk of inflation moving higher has risen


Federal Reserve (Fed) Bank of St. Louis President Alberto Musalem hit the wires on Wednesday, noting that sticky inflation figures make it difficult for the Fed to continue to ease rates. The Fed's Musalem spun focus onto the overall healthy appearance of the US labor market to ease negative pressure from admitting that inflation continues to flaunt downward pressure from the Fed.

Key highlights

The US central bank may be on the last mile to price stability, inflation is expected to converge to the 2% target over the medium term.

Recent information suggests that the risk of inflation moving higher has risen, while risks to the job market remain unchanged or have fallen.

The business sector is generally healthy, though the smallest businesses and those in the consumer discretionary market is seeing slower earnings growth.

Recent high productivity could prove durably structural, but that remains uncertain.

Growth is broad-based and driven by consumption, income growth, productivity, supportive financial conditions, and wealth effects.

Strong economy on track for a solid fourth quarter.

Monetary policy is to remain appropriately restrictive while inflation remains above 2%.

Further rates easing may be appropriate if inflation continues to fall.

Monetary policy is well positioned, the Fed can judiciously and patiently judge incoming data to decide on further rate cuts.

The pressure in services industries is slowly abating.

Core consumer price index and core personal consumption expenditures price index remain elevated.

I am attuned to the risks of rising layoffs, though disorderly deterioration of labor market is unlikely given health of businesses.

I expect economy to grow closer to 2% rate going forward.

Monetary policy is restrictive, but financial conditions overall are supportive of economic activity.

 It is hard to derive much signal from most recent jobs report; low number clouded by storm and other impacts.

I do not think the dollar's status is challenged by crypto currencies.

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD continues to grind out further losses

EUR/USD continues to grind out further losses

EUR/USD continued to drift into the basement on Wednesday, clipping into a 54-week low and settling within touch range of 1.0550. Fiber continues to shed weight on the charts as broader FX markets pivot full-bore into holding the Greenback. 

EUR/USD News
GBP/USD sheds weight for a fourth straight day on Wednesday

GBP/USD sheds weight for a fourth straight day on Wednesday

GBP/USD eased further into the low end on Wednesday, trimming further south of the 200-day Exponential Moving Average in a one-sided bearish decline as the pair closes in the red for a fourth consecutive trading day.

GBP/USD News
Gold extends slide to fresh two-month low

Gold extends slide to fresh two-month low

After shedding some ground throughout the first half of the day, the US Dollar is back in fashion. XAU/USD trades at its lowest in two months in the $2,580 region and is technically poised to extend its slump.

Gold News
Australia unemployment rate expected to remain steady for third straight month in October

Australia unemployment rate expected to remain steady for third straight month in October

The Australian Unemployment Rate is foreseen stable at 4.1% in October. Employment Change is expected at 25K, much lower than the 51.6K posted in September. AUD/USD is under pressure and may soon pierce the 0.6500 mark. 

Read more
Trump vs CPI

Trump vs CPI

US CPI for October was exactly in line with expectations. The headline rate of CPI rose to 2.6% YoY from 2.4% YoY in September. The core rate remained steady at 3.3%. The detail of the report shows that the shelter index rose by 0.4% on the month, which accounted for 50% of the increase in all items on a monthly basis. 

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures