St. Louis Fed's Musalem Says Multiple Additional Rate Hikes Will Be Needed to Bring Inflation to Heel

Federal Reserve Bank of St. Louis President Alberto Musalem said on September 21 that more interest rate increases will likely be necessary to bring inflation under control, signaling a continued tightening path just days after the Fed delivered its first rate hike in more than three years.

The FOMC voted unanimously on September 15-16 to raise the federal funds rate by 25 basis points to a target range of 3.75%-4%, citing elevated inflation. The committee's updated projections at that meeting already pointed to the possibility of at least one additional increase this year, and Musalem's Reuters interview reinforced that view from one of the central bank's most prominent hawks.

Musalem has been among the most vocal advocates for tighter policy, having previously stated the Fed should have hiked at the July meeting when only three regional presidents favored a move. He does not hold an FOMC vote this year, but his comments carry weight as a signal of where hawkish sentiment within the Fed stands. He has previously warned that inflation expectations risk becoming unanchored if the central bank does not impose meaningful restraint on underlying price pressures, which he sees running close to 3% rather than the Fed's 2% target.