Fed's Moussalem: Need to Keep Interest Rates Unchanged for a Period of Time
Svmuu News: On Wednesday, Federal Reserve official Moussalem stated that high oil prices may keep the core inflation rate for the remainder of this year nearly one percentage point above the Fed's 2% target, and the Fed may need to keep interest rates unchanged. Moussalem said, "We are likely to see some pass-through of oil prices to core inflation." By the end of this year, the fundamental measure of price increases will be "slightly below 3%, perhaps around 3%," with risks of further upward movement. Moussalem noted that the Fed might maintain its policy rate within the current range of 3.50%-3.75% for "some time," while monitoring inflation, employment, and economic data in the coming months. Many of his colleagues share this view. The impact of last year's tariff increases may gradually fade this quarter, and housing price inflation is also easing. However, as oil prices rise, inflation in a range of service sectors remains high. If inflation begins to rise and risks pulling up inflation expectations, he would be open to raising interest rates. Moussalem also described the oil market as "the third negative supply shock in 12 months." Coupled with rising tariff rates and stricter immigration regulations, both the inflation outlook and the job market face risks, and economic growth may be impacted. He believes economic growth will slow this year but remain between 1.5% and 2%.
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Source:Odaily · Source Link
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