Fed’s Musalem says won’t prejudge rate call view for September FOMC - CNBC

Federal Reserve Bank of St. Louis President Alberto Musalem stated on Thursday that he is open to the possibility of recommending a rate increase at the upcoming Federal Open Market Committee meeting on September 15-16, though higher rates are still justified by the current economic performance. The monetary policy is currently "accommodative," and the inflation-adjusted federal funds target rate is below the rate the committee believes should be neutral in the long run.

He noted that financial conditions are "pretty accommodative" at present. Musalem reiterated that inflation remains too high, with underlying price pressures between 2.5% and 3% above the 2% inflation target. He added that he expects inflation to either ease or stay sticky around current levels. The latter scenario led him to advocate for raising the federal funds rate, which is currently between 3.5% and 3.75%, at the July meeting.

When asked about his stance for the upcoming meeting, Musalem said he wants to keep an open mind and that gradual interest rate increases are preferable and less disruptive than potentially larger, more abrupt increases.