St. Louis Federal Reserve President Alberto Musalem stated on Friday (Aug 22) that he needs to see more data before deciding whether to support a rate cut at the Fed’s upcoming meeting on September 16–17. He cited persistent inflation above the central bank’s 2% target and unmaterialized risks to the labor market as key considerations.
“Inflation is clearly closer to 3% than 2%, and while that isn’t the base case, there’s a possibility it could remain elevated,” Musalem noted. “That poses a risk, in contrast to the labor market risk, which hasn’t materialized yet.”
He added that the current policy stance is appropriate given strong employment and inflation above target levels. “The policy is rightly positioned to counter inflation under current labor market conditions,” he said. “But if signs of labor market weakness emerge, that stance would need to be reassessed.”
Musalem emphasized that his decision will be based on evolving data, saying, “I’ll continue to update my outlook and reassess risks right up until a few days before the meeting. That’s when I’ll make my call.”
His comments came during the Federal Reserve’s annual research conference, where Chair Jerome Powell earlier signaled the possibility of a September rate cut, citing a base case that tariff-related inflation pressures may subside while labor market risks appear to be growing.
Powell stated that “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” However, Musalem highlighted the cautious tone in Powell’s wording, noting, “The key word there is ‘may’.”
