St. Louis Fed President Alberto Musalem said he supported last week’s 25bps rate cut as a “precautionary move” to protect the labor market from further weakening. He emphasized in a speech, however, that there is only “limited room for easing further” before monetary policy risks becoming “overly accommodative.”
He stressed that while the Fed can provide insurance against labor market softness, it must also “lean against persistence in above-target inflation.”
Musalem added that he will continue to update his economic outlook in the months ahead to strike the right balance between employment and inflation.
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