Fed official signals further interest rate hikes

Speaking at a Shadow Open Market Committee event in New York, Musalem called for further interest rate increases, emphasizing that early and gradual action would have a less damaging impact on the economy than larger, more abrupt rate hikes later.

Musalem stated that monetary policy remained supportive of economic activity despite September's interest rate increase. Warning that the risk of inflation remaining persistently above target continues to dominate, the Fed official argued that the recent tightening of financial conditions has not been sufficient to ease price pressures. The 3.6% year-over-year increase in the U.S. Personal Consumption Expenditures (PCE) Price Index in September has further reinforced inflation concerns. Following the Fed's decision to hold interest rates steady at 3.75%–4.00% in October, Musalem's remarks have kept the possibility of another rate hike in December firmly in focus.