Fed's Musalem Says Dual Mandate Risks Are Shifting Toward Inflation
By Jessica Coacci
St. Louis Fed President Alberto Musalem said risks to the Federal Reserve's dual mandate are shifting more toward inflation than unemployment.
Speaking to a Mississippi Bankers Association conference on Wednesday, Musalem said there are plausible scenarios under which the economy would require the Fed to keep the policy rate at its current level for some time. Still, due to the amount of economic uncertainty, he sees other scenarios that could require the Fed to ease or raise rates.
Acknowledging that inflation has been running above the Fed's target, Musalem said near-term inflation expectations have been rising, while longer-run inflation expectations have started to drift up slightly. He added the labor market has been stabilizing.
Musalem said the Fed's current policy setting is either neutral or slightly accommodative.
When discussing uncertainty tied to the conflict in Iran, Musalem said future consumer sentiment may begin to weigh on economic activity. Musalem said a business leader recently told him: The best worker to fire is the one that I haven't hired because of the uncertainty.
Write to Jessica Coacci at jessica.coacci@wsj.com
(END) Dow Jones Newswires
May 06, 2026 11:08 ET (15:08 GMT)
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