Fed’s Musalem Says Labor Market Is Balanced and Need Not Cool to Bring Inflation Down
Updated
Summary
Federal Reserve policymaker Alberto Musalem said the job market was overall balanced and stable, and did not need to cool for inflation to come down.
Musalem said his contacts were mostly worried about inflation, not the job market. He also said market inflation expectations remained anchored and that he did not see the Fed’s credibility being questioned.
Why it matters
Musalem attributed rising nominal yields to rising real yields, partly reflecting rate expectations. He also said AI investment and government deficits were pressuring yields higher.
Musalem said he had heard some investor concerns about fiscal sustainability. Separately, he said strong demand for capital was likely to keep rates higher than they used to be.