Fed's Musalem says another rate hike is needed 'soon'
St. Louis Fed President Alberto Musalem said Friday that additional tightening will be necessary soon because inflation is too high and unlikely to ease without Fed action, two days after the Fed held rates at 3.75%-4.00%.
St. Louis Fed President Alberto Musalem told a Shadow Open Market Committee event on Friday that he judges additional firming of monetary policy will be necessary, and soon. He argued that earlier, smaller moves are less disruptive than later, abrupt ones.
| Item | Detail |
|---|---|
| Fed funds target (after this week’s meeting) | 3.75%–4.00%, unchanged |
| Last hike | September |
| Dissents this week | 2, both in favor of a hike |
| Next FOMC meeting | Dec. 8–9 |
| Musalem’s voting status | Non-voter in 2026, votes in 2027 |
Why it matters — Musalem said inflation remains too high relative to the 2% target with upside risks, and is unlikely to ease without Fed action. His comments add to signs that a December hike is a live option, even though Chair Kevin Warsh did not commit to a move after Wednesday’s decision.
Market reaction — The remarks came during a tech-led selloff, with the Nasdaq down more than 2% on Intel and Amazon results. Higher-rate expectations add pressure on richly valued growth stocks.
WMR data — Track the 2-year and 10-year Treasury yields on Market pulse for how much of a December hike is being priced in.
What to watch next — Other Fed speakers’ comments, the October jobs report and CPI before the Dec. 8–9 meeting.
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