According to Jinshi, St. Louis Reserve Chairman Moussalem said that by the time of last month's meeting, the risk of inflation hovering between 2.5% and 3% had increased. Therefore, he believed that more caution should be exercised in further rate cuts.
Mousallem had previously signaled that he supported the Fed's decision to cut interest rates by 50 basis points in September. "Things have changed since September," he said in an interview Thursday. "The economic data is stronger and the inflation numbers are higher than expected. So I have changed my assessment of the risks," and future rate cuts "have to be gradual and more gradual than I thought in September." Mousallem said the job market is in good shape and needs to be closely monitored, but "there is still the inflation aspect" of the Fed's mission. Because his estimate of the neutral rate is slightly higher than most of his colleagues, the current rate may be set slightly below the appropriate limit.