Federal Reserve's Moussallem: Unwilling to Support Further Rate Cuts

Odaily Planet Daily reports that Federal Reserve’s Moussain on Friday stated that given the inflation rate has remained above the Fed’s 2% target level, he is less inclined to support further rate cuts. Moussain expressed his agreement with the Fed’s decision to keep interest rates unchanged this week and believes that at the 3.5% to 3.75% interest rate level, the Fed’s target rate is no longer high enough to exert a significant restraining effect on the economy. Continued price increases should prevent the Fed from lowering interest rates to support the economy. Moussain said, “Given that inflation is above the target level and the economic outlook faces roughly balanced risks, I believe it is not appropriate to lower interest rates into the easing range at this time.” Moussain also pointed out that attempting to ease labor market pressures by lowering the short-term interest rates controlled by the Fed could backfire. He stated that such measures might trigger concerns about future inflation and push up long-term interest rates, which are key factors in determining mortgage costs and corporate borrowing costs.