Fed's Musalem Says More Rate Hikes Likely Needed, Calls Current Policy Still Accommodative

Federal Reserve Bank of St. Louis President Alberto Musalem said additional interest rate increases may be necessary to bring inflation back to the central bank's 2% target, warning that current monetary policy remains "on the accommodative side." In an interview with Reuters on Sept. 21, 2026, Musalem said that "without further policy restraint on inflation it is more likely to be substantially above our 2% target in 18 months than at target," citing persistent demand and recurring supply pressures. His comments followed the Fed's unanimous vote last week to raise rates for the first time in more than three years, with officials signaling one more hike before year-end. The benchmark rate now sits at 3.75% to 4%. Musalem, who does not vote on policy decisions this year, said earlier and incremental rate increases would be "less disruptive" than larger actions later. Fed Chairman Kevin Warsh said the move aimed to remove a "dose of accommodation."