Fed's Musalem Calls for Rate Hike 'Soon' to Combat Persistent Inflation

St. Louis Fed President Alberto Musalem said Friday that additional monetary policy firming is necessary and imminent to address persistently high inflation, according to remarks prepared for the Shadow Open Market Committee. He argued that moving sooner in smaller increments while inflation expectations remain anchored carries less risk than larger, abrupt actions later. Musalem noted inflation remains above the Fed's 2% target with upside risks and is unlikely to ease without central bank action. He said monetary policy and financial conditions remain accommodative despite recent tightening. The Fed held its policy rate at 3.75%-4.00% at this week's meeting, as widely expected, after raising rates in September. Markets anticipate another increase at the December 8-9 meeting. Two policymakers dissented this week in favor of a hike. Musalem, who does not currently vote on the policy-setting committee but will in 2027, said he was encouraged by inflation progress alongside Chairman Kevin Warsh, who acknowledged price stability has not yet been achieved.