Alberto Musalem, the head of the Federal Reserve Bank of St. Louis, said on Friday that he would be open to cutting interest rates if the job market starts showing signs of trouble. But he also made it clear that the Fed should not make quick or fixed decisions. He said they need to move carefully and stay alert to changing conditions.
During a talk in Washington, Musalem mentioned that the fight against inflation is still not over. He said the central bank must stay focused and avoid rushing into any move that could make inflation harder to control.
He explained that while inflation in housing-related services is finally improving, other service prices are still not coming down as easily as hoped.
Musalem also shared that by the end of 2025, businesses may start passing new tariffs on to consumers, which could lead to higher prices. He expects the effects of these tariffs to ripple through the economy for several months after that.
His comments come at a time when the Federal Reserve is studying new data to decide its next steps on interest rates, trying to balance inflation risks with the need to support economic growth.
