Why One Fed Official Thinks Interest Rates Are At ‘Appropriate’ Levels | Global News Avenue

Ahead of the December FOMC meeting, St. Louis Fed President Alberto Musalem warned against cutting his influential interest rate

in comments Bloomberg News During the incident, Alberto Mussallem, President of the Federal Reserve Bank of St. Louis, stated that the current federal funds rate The Fed placed “appropriate restraints” on economic conditions, suggesting he may be more inclined than some colleagues to pause when the Fed makes its next rate decision on Dec. 18.

“Monetary policy is well positioned,” Moussalim said. “The policy rate remains above what would be reasonable for a neutral policy rate, even with inflation above target and a labor market close to full employment.”

His statement is as follows Comments from other Fed officials This week. Fed Governor Christopher Waller, San Francisco Fed President Mary Daly and others said in comments this week that the policy was only “restrictive.”

“Policy remains restrictive enough that further cuts at the next meeting will not significantly change the stance of monetary policy and leave enough room to slow the pace of rate cuts later,” Waller said.

Daly says some officials are still retaining the possibility of no rate cut in December fox business She is “open” to keeping interest rates at current levels.

On the other hand, traders see a 76% chance of the Fed cutting interest rates by 25 basis points in December, according to CME Group’s FedWatch tool, which forecasts interest rate changes based on federal funds futures trading data.

Warning not to cut ‘too much too soon’

Musalem Alternate Member Federal Open Market Committee (FOMC)did not directly indicate what actions he would support at the upcoming meeting. However, he did think Strong recent labor reportas well as inflation data showing Price pressures ease more slowlymeaning the Fed needs to be “patient” when considering cutting interest rates.

“In the current environment, too much easing too quickly poses a greater risk than too little or too slow easing,” Mussallim said.

The comments from Moussalim and other officials came before the start of the Fed’s gag period on Saturday, which limits them from commenting on policy ahead of the Dec. 17-18 meeting.