WASHINGTON: A senior member of the US Federal Reserve on Friday indicated he could back another interest rate cut later this month, while urging a meeting-bymeeting approach going forward.
“I could support a path with an additional reduction in the policy rate,” St. Louis Fed President Alberto Musalem said during a conference in Washington, which was streamed online.
Musalem, who is one of 12 voting members of the Fed’s interest rate-setting committee this year, said his vote would ultimately depend on whether “further risks” to the labour market emerge, and provided that risks to inflation and inflation expectations remain under control.
The Fed has a dual mandate to act independently to tackle both unemployment and inflation. Many Fed policymakers have indicated in recent months that they see the Fed’s dual mandate coming into better balance, meaning they are paying more attention to concerns in the labor market.
However, their vantage point on the health of the world economy has been clouded since the start of the month by the lack of available official data due to the ongoing US government shutdown.
Musalem took a somewhat tougher tone on Friday than many of his colleagues, some of whom have already said they would support an additional rate cut in December this year.
“I do think we need to not be on a preset course,” he said, on the last day before the Fed enters its regular pre-rate decision communications blackout. “I perceive limited space for easing before monetary policy could become overly accommodative,” he added, indicating his ongoing concern about inflation. Futures traders currently see a 100 per cent chance that the Fed will cut interest rates by a total of at least 50 basis points over its two remaining meetings this year,
