Fed's Musalem Wants Monthly Inflation Below 0.2%, Flags El Niño Risk
Federal Reserve official Musalem indicated he needs to see monthly inflation readings under 0.2% and cautioned that the El Niño weather pattern could become a fresh supply shock.
St. Louis Fed President Musalem set a clear bar for inflation progress, stating he wants to observe monthly price increases below 0.2% on a consistent basis. The comment signals a hawkish patience, with the bar for rate cuts remaining high until such data materializes.
He also expressed openness to reviewing the central bank's internal structures, noting he is very open-minded about Fed task forces and their potential role in policy analysis.
Additionally, Musalem warned that the emerging El Niño weather event might generate a fresh supply shock, potentially disrupting goods production and transportation networks. The remark underscores lingering upside risks to inflation from non-monetary factors.
Source: First Squawk