St. Louis Fed President Alberto Musalem emphasized that policymakers must intensify their efforts to effectively lower inflation toward the Federal Reserve's target of 2%. In a statement made on Monday, Musalem noted that inflation has shown a significant decrease from the highs experienced in mid-2022.
He highlighted that the core personal consumption expenditures index, which serves as the Federal Reserve's preferred metric for measuring inflation, has averaged 2.4% over the past three months. Despite a slight rise in near-term inflation expectations, he conveyed that the long-term inflation outlook has remained relatively stable.
Musalem's comments were part of delivered remarks at a conference held in Washington, DC. He stated that achieving price stability is a priority and that there is still considerable work to be done. Looking ahead, he pointed out that after experiencing 100 basis points of interest rate cuts in the autumn of 2024, the current stance of the Fed's monetary policy is significantly less restrictive compared to the past seven months.
The labor market has shown signs of recovery after a period of softening during the first three quarters of 2024. However, the recent increase in jobless claims is a trend that warrants attention, Musalem advised. He reassured that the forecast for robust economic growth remains promising, describing the labor market as healthy and financial conditions as supportive.
Nevertheless, he acknowledged that recent data has been weaker than anticipated, which presents potential risks to economic growth. Musalem concluded his remarks by asserting the importance of adopting a patient policy approach at this juncture to effectively attain maximum employment, price stability, and ensure durable economic expansion..