{
  "id": 8981751,
  "title": "Exclusive-Fed’s Musalem says more rate hikes likely needed to quell inflation",
  "url": "https://urgent.news/2026/09/21/exclusive-feds-musalem-says-more-rate-hikes-likely-needed-to-quell",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-21T18:54:33.000Z",
  "source": {
    "name": "Investing.com",
    "slug": "investing-com",
    "url": "https://www.investing.com/news/economy-news/exclusivefeds-musalem-says-more-rate-hikes-likely-needed-to-quell-inflation-4909515"
  },
  "original_language": "en",
  "account": "Federal Reserve President Alberto Musalem of the St. Louis Fed stated on Monday that further interest rate hikes will likely be necessary to curb inflation stemming from robust demand and a soaring commodity price shock, which has extended beyond oil. Musalem emphasized that it would be preferable for the US central bank to act sooner rather than later. He explained that persistent demand and recurring supply pressures are still contributing to elevated inflation risks, and without additional policy restraint on inflation, it is more likely that the 2% target will be significantly surpassed within 18 months. Musalem, who is not a voting member of the Federal Open Market Committee, declined to comment on the Fed's potential actions or the precise level the policy rate may need to reach to alleviate inflation. However, he stressed that incremental, earlier policy tightening is preferable to delayed, larger, and potentially more abrupt measures further ahead. Inflation is a real issue, according to Musalem, who noted that even after accounting for the impact of oil and other supply-related factors, underlying inflation remains about a percentage point above the Fed's target and is trending in the wrong direction. Recent progress in bringing inflation back down to the 2% target has been minimal. The Personal Consumption Expenditures Price Index, the Fed's primary inflation indicator, stood at 3.7% year-over-year in July, compared to a recent low of 2.3% in April 2025, as the Trump administration announced plans for global import tariffs. This year, the shock to import prices was followed by the start of the US-Israeli conflict with Iran, which propelled fuel costs globally, with diesel prices hitting a record high recently. Commodity prices, such as copper, have also been increasing due to the artificial intelligence investment boom. Despite resilient US domestic spending and growth, these factors pose an additional inflation challenge for the Fed. Musalem explained that both strong demand and supply forces are influencing the economy. Last week, the Fed raised interest rates by 0.25%, and the central bank removed a reference in its policy statement that linked recent inflation partly to supply shocks, stating simply that inflation remains elevated. This shift reflects increasing skepticism within the central bank that current price pressures will fade over time without Fed intervention. While factors like tariffs and oil price increases were initially perceived as temporary, their influence has proven more enduring than anticipated, with inflation now being driven by demand factors as well. Musalem considers the current policy rate of 3.75%-4.00% to be on the accommodative side, meaning it is not high enough to curb economic activity. Investors anticipate three more quarter-point interest rate hikes over the five meetings between now and April, with roughly even odds that the central bank will increase rates again in October, just before the US midterm elections. The median projection of Fed officials after last week's meeting suggested policymakers expect one more rate hike in 2025, with an almost even split over the need for another move in 2027, a more conservative outcome than investors currently expect. While tighter policy may be necessary, Musalem does not believe it will result in higher unemployment or increase the likelihood of a recession. The labor market is not a source of inflation, and there is no inherent need to slow the labor market to achieve the inflation target, according to Musalem. However, he expressed hope that businesses would scale back the anticipated price increases in their input costs, including fuel, raw materials, transportation, insurance, and skilled labor. Musalem emphasized that there is ample evidence that inflation poses the principal challenge facing the economy currently.",
  "summary": null,
  "key_points": [
    "Federal Reserve President Alberto Musalem says further rate hikes needed to control inflation",
    "Persistent demand and supply pressures contributing to elevated inflation risks",
    "Musalem prefers earlier, incremental policy tightening over delayed, larger measures"
  ],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 3,
    "also_reported_by": [
      {
        "outlet": "FXStreet",
        "title": "Fed's Musalem calls for more rate hikes",
        "url": "https://urgent.news/2026/09/21/feds-musalem-calls-for-more-rate-hikes",
        "published": "2026-09-21T18:46:03.000Z"
      },
      {
        "outlet": "Bloomberg",
        "title": "Fed’s Musalem Says More Rate Hikes Likely Needed to Cool Prices",
        "url": "https://urgent.news/2026/09/21/feds-musalem-says-more-rate-hikes-likely-needed-to-cool-prices",
        "published": "2026-09-21T19:02:46.000Z"
      }
    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}