Fed's Musalem: Economy is near full employment

St. Louis Fed President Alberto Musalem explained on Monday that he backed last week's rate cut, describing it as a precaution to safeguard the job market. At the same time, he cautioned that with inflation still running above the Fed's 2% goal, there might not be much room left for further cuts.

Key Quotes

He supported a quarter-point cut as a precautionary move to help the labour market but sees limited room for further easing.

Monetary policy must continue to lean against inflation that remains above target.

Overemphasis on the labour market could lead to policy that is too loose and does more harm than good.

Tariffs are adding to inflation, and the impact on prices has not yet been fully felt.

Economy is near full employment, and the recent cut should help maintain that.

Loose financial conditions and other factors mean the Fed should move cautiously on further cuts.

Would support further cuts if more signs of labour market weakness emerge, provided risks of persistent inflation and rising inflation expectations have not increased.