Federal Reserve's Mossala: Current interest rate setting remains appropriate

St. Louis Federal Reserve President Mohamed Mussaleem said on Wednesday that the Fed's current interest rate stance is likely to remain appropriate for the foreseeable future, and he may support further rate cuts or hikes depending on economic developments. Mussaleem stated that the Fed's 3.5%-3.75% interest rate target represents a good balance in the face of risks such as persistent inflation and a labor market showing signs of fragility in recent months. This target is likely at the lower end of the neutral range, suggesting that further rate cuts by the Fed could inadvertently push up inflation. Mussaleem noted, "The policy is effective in addressing the risks of a dual mandate, and I expect the current policy rate level to remain appropriate for some time." He indicated that if the labor market weakens and rate cuts do not damage the Fed's credibility in combating inflation, he may ultimately support further rate cuts. However, he also stated that if inflation rises, or if the public loses confidence in the Fed's handling of inflation, he may support rate hikes. (Jinshi)