St. Louis Feds Musalem: Inflation Above 2%, Rates May Hold

St. Louis Federal Reserve President Alberto Musalem stated on Wednesday that inflation remains meaningfully above the central bank's 2 percent target and that risks to monetary policy have shifted toward higher price pressures, suggesting interest rates may need to stay on hold amid a stable labor market.

Speaking at the Mississippi Bankers Association, Musalem noted that recent data shows inflation progress has stalled. "Inflation is running meaningfully above our target," he said, adding that risks have moved "towards more risks on the inflation side." He emphasized the need for sustained movement toward 2 percent before considering policy changes, while acknowledging plausible scenarios for rate cuts or hikes depending on incoming data.

The Personal Consumption Expenditures price index, the Fed's preferred gauge, rose to 3.5 percent in March from 2.8 percent the prior month, with core inflation excluding food and energy climbing to 3.2 percent from 3 percent. Consumer price readings have similarly hovered above target levels. Upcoming April data, due next week, are expected to indicate further acceleration, according to economist forecasts.

Musalem attributed pressures to...