Fed's Musalem: Further Rate Hikes May Be Needed Over the Next 6 to 9 Months

On October 9, according to Jinshi Data, US Federal Reserve Bank of St. Louis President Musalem stated that the Federal Reserve needs to raise interest rates again to push inflation back to its 2% target level. He noted that if the "timely" window is approximately 18 months, interest rates could be raised further at appropriate times over the next six to nine months.

Musalem pointed out that while current inflation remains the primary issue for the US economy, strong economic growth and a stable labor market suggest the Fed is expected to lower inflation without significantly harming employment. Regarding the late-October policy meeting, he stated he maintains an open mind and has not predicted the outcome, but the inflation situation requires policymakers to continue considering tightening measures.

Additionally, Musalem believes that the rise in US Treasury yields does not reflect a loss of investor confidence, but instead indicates market expectations of higher real interest rates and intensified capital competition, with the overall financial environment remaining accommodative and supportive of economic growth.