If inflation slows down, the head of the St. Louis Federal Reserve said, “the time may be nearing” for the U.S. central bank to cut interest rates.
President Alberto Musalem said that new price reports “have bolstered my confidence” that inflation is slowly returning to the Federal Reserve’s goal of a 2% annual rise.
Musalem has said in the past that he wanted to see a string of low inflation readings before he would back lowering interest rates. Consumer price reports for the last three months have been on the low side, which means that inflation is slowing down even more.
Rate cuts by the Federal Reserve are likely to happen next month because inflation is slowing down and there are signs that the economy is getting weaker.
In order to bring down high inflation, the Federal Reserve raised rates to a level not seen in 23 years in 2022 and 2023. However, the high cost of getting money has slowed down economic growth to some extent.
Like, the jobless rate has gone up from 3.4% to 4.3% in the last year and a half.
Musalem said that the threat of rising unemployment seems to have become more important than the threat of rising prices.
Officially, it is the Fed’s job to keep unemployment and inflation low. Fed officials are more worried about the job market getting too weak as inflation slows down. That’s one reason they’re getting ready to lower rates.
In April, Musalem became head of the St. Louis Fed. He doesn’t have a vote on the Fed’s main interest rate-setting group this year.
