St. Louis Fed President Alberto Musalem said on CNBC that his outlook has shifted in recent months, with inflation risks revised “slightly lower” and potential labor market weakness assessed “slightly higher”.
Musalem stressed that his views remain fluid and will continue to evolve ahead of the September FOMC meeting. He avoided committing to a September rate cut but was clear that a 50bps move is “unsupported” by current conditions.
On tariffs, Musalem said any inflationary impact is likely to fade within two or three quarters.
Separately, Richmond Fed President Thomas Barkin said the Fed is still weighing whether high unemployment or sustained inflation poses the greater risk to its dual mandate.
“High unemployment is, in fact, disinflationary. Or is inflation high enough or sustained enough that it’s going to put inflation expectations at risk? And I think that’s the trade-off you’re trying to manage,” Barkin said.
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