{"id":438509,"date":"2026-09-22T07:59:56","date_gmt":"2026-09-22T00:59:56","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/icymi-feds-musalem-says-more-rate-hikes-likely-needed-as-inflation-risks-stay-elevated-438509\/"},"modified":"2026-09-22T07:59:56","modified_gmt":"2026-09-22T00:59:56","slug":"icymi-feds-musalem-says-more-rate-hikes-likely-needed-as-inflation-risks-stay-elevated","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/icymi-feds-musalem-says-more-rate-hikes-likely-needed-as-inflation-risks-stay-elevated-438509\/","title":{"rendered":"ICYMI: Fed&#8217;s Musalem says more rate hikes likely needed as inflation risks stay elevated"},"content":{"rendered":"<div>\n<p dir=\"ltr\">Musalem&#8217;s comments reinforce a hawkish tone from within the Fed just days after this month&#8217;s rate rise, and his preference for acting sooner rather than later aligns with market pricing that already points to further tightening ahead, with investors currently expecting three more quarter point hikes across the next five meetings through April and roughly even odds of an October move. His framing of the current 3.75-4.00% policy rate as still &#8220;on the accommodative side&#8221; suggests he sees meaningful room for further increases before policy becomes restrictive. For commodities specifically, his explicit inclusion of base metals such as copper alongside oil broadens the inflation narrative beyond the Middle East driven energy shock that has dominated recent Fed commentary, and may draw closer market attention to industrial metals pricing as a policy relevant input alongside crude.<\/p>\n<p dir=\"ltr\">&#8212;<\/p>\n<p dir=\"ltr\">Greg had this news as it was breaking:<\/p>\n<ul>\n<li><a href=\"https:\/\/investinglive.com\/central-banks\/st-louis-fed-s-musalem-interest-rates-likely-need-to-rise-further-to-tame-inflation\" target=\"_blank\" rel=\"follow\">St. Louis Fed\u2019s Musalem: Interest rates likely need to rise further to tame inflation<\/a><\/li>\n<\/ul>\n<p>Its fitting with other comments:<\/p>\n<ul>\n<li><a href=\"https:\/\/investinglive.com\/central-banks\/fed-s-collins-pencils-in-second-hike-this-year-then-expects-rates-on-hold-in-2027\" target=\"_blank\" rel=\"follow\">Fed&#8217;s Collins pencils in second hike this year, then expects rates on hold in 2027<\/a><\/li>\n<\/ul>\n<p>And:<\/p>\n<ul>\n<li><a href=\"https:\/\/investinglive.com\/central-banks\/deutsche-bank-says-markets-underpricing-scale-of-global-rate-hiking-cycle\" target=\"_blank\" rel=\"follow\">Deutsche Bank says markets underpricing scale of global rate hiking cycle<\/a><\/li>\n<\/ul>\n<p dir=\"ltr\">&#8212;<\/p>\n<p dir=\"ltr\">\nMusalem says the Fed&#8217;s own rate hike this month may not be enough, and that waiting to do more later would be worse than acting sooner in smaller steps.<\/p>\n<p dir=\"ltr\">Summary:<\/p>\n<ul dir=\"ltr\">\n<li>St. Louis Fed President Alberto Musalem told Reuters on Monday that without further policy restraint, inflation is more likely to stay substantially above the Fed&#8217;s 2% target 18 months from now than to reach it.<\/li>\n<li>He said both persistent demand and recurring supply forces are keeping inflation risks elevated, and that interest rates likely need to rise further to address both.<\/li>\n<li>Musalem described the current 3.75% to 4.00% policy rate as &#8220;on the accommodative side,&#8221; meaning it may still be stimulating rather than restraining the economy.<\/li>\n<li>He said the labour market remains stable around full employment and is not currently a source of inflation pressure.<\/li>\n<li>Musalem said the current commodity price shock extends beyond oil to include base metals such as copper, and that even excluding supply related factors, inflation remains &#8220;too high,&#8221; running as high as 3%.<\/li>\n<li>He said business contacts report planning price increases closer to 3%, and that it would be better for the Fed to hike &#8220;earlier and incremental&#8221; rather than &#8220;later and larger.&#8221;<\/li>\n<\/ul>\n<p dir=\"ltr\">\nFederal Reserve Bank of St. Louis President Alberto Musalem said Monday that the central bank will likely need to raise interest rates further to bring inflation under control, warning that without additional policy restraint, inflation is more likely to remain substantially above the Fed&#8217;s 2% target in 18 months than to reach it, according to Reuters. Speaking in an interview, Musalem said persistent demand alongside recurring supply forces are continuing to keep inflation risks elevated, and that meaningful policy restraint is crucial if the Fed is to reach its target within roughly a year and a half.<\/p>\n<p dir=\"ltr\">Musalem described the Fed&#8217;s current policy rate range of 3.75% to 4.00%, following this month&#8217;s quarter point increase, as &#8220;on the accommodative side,&#8221; suggesting the current setting may still be adding stimulus to the economy rather than restraining it. He said consumption and investment are growing at what he called a healthy, strong pace, while inflation risks have increased for a range of reasons, including geopolitical forces. On the labour market, Musalem said conditions remain stable around full employment and are not currently contributing to inflationary pressure, distinguishing the present situation from a wage driven inflation dynamic.<\/p>\n<p dir=\"ltr\">On the source of price pressures, Musalem broadened the current commodity shock beyond oil, saying it now includes base metals such as copper. He said that even stripping out supply related factors entirely, underlying inflation remains too high, running as high as 3%, and that business contacts have told him they are planning price increases closer to that level. Firms are reporting sharply higher non-labor input costs across fuel, other raw materials, transportation, insurance and skilled labor, he said, adding that there is ample evidence inflation remains the principal problem facing the economy currently.<\/p>\n<p dir=\"ltr\">On the pace of any further tightening, Musalem said he favours hiking rates &#8220;earlier and incremental&#8221; rather than waiting and delivering &#8220;later and larger&#8221; increases, arguing that acting sooner in smaller steps would likely cause less economic disruption than delaying action. His remarks follow the Fed&#8217;s unanimous decision last week to raise its benchmark rate by a quarter point, its first increase in more than three years, a move Fed Chair Kevin Warsh described as removing a degree of policy accommodation. Investors currently expect three further quarter point rate increases across the five Fed meetings between now and April, with roughly even odds attached to a further move in October, just ahead of the US midterm elections.<\/p>\n<p>                            This article was written by Eamonn Sheridan at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Musalem&#8217;s comments reinforce a hawkish tone from within the Fed just days after this month&#8217;s rate rise, and his preference for acting sooner rather than later aligns with market pricing that already&hellip;<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-438509","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/438509","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=438509"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/438509\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=438509"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=438509"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=438509"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}