He president of the Federal Reserve of San Luis, Alberto Musalem, He said Friday that the U.S. central bank does not need to cut interest rates further unless the labor market begins to deteriorate or inflation declines.
He current range of interest rateslocated between 3.50% and 3.75%, is neutral, Musalem said in remarks prepared for an event held at the University of Arkansas. Since the economy is expected to continue growing above trend, there is no need to add monetary stimuli at a time when both credit conditions and fiscal policy are acting as “favorable winds,” he added.
“I see tailwinds supporting economic growth,” Musalem said. “With inflation above target and risks to the outlook balanced, I believe it would be unwise to lower rates into accommodative territory at this time.”
Musalem said he hoped the inflation It is expected to move lower toward the Fed’s 2% target from the current level, which is about a percentage point above that level, but also sees risks that it could persist. In addition, he pointed out that now there is less risk of a “substantial deterioration” in the labor market.
