Fed’s Musalem: Time may be nearing for policy adjustment

St. Louis Fed President Alberto Musalem indicated today that the balance of risks between inflation and unemployment has shifted, becoming “more balanced”. Speaking at an event, Musalem expressed increased confidence in the inflation outlook, noting that recent data has reinforced this view. He highlighted that the labor market is “no longer overheated,” although services and shelter inflation remain “a little sticky.”

Musalem suggested that, barring any further economic shocks, inflation appears to be returning to a path consistent with Fed’s 2% target over time. He also hinted that “the time may be nearing” for Fed to consider adjusting its policy stance to a moderately restrictive level.