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Fed’s Musalem calls for forceful restraint on inflation

2026-08-07·newswire-us-stock-021002
Fed’s Musalem calls for forceful restraint on inflation.

St. Louis Federal Reserve President Alberto Musalem said policymakers cannot afford to tolerate more inflation while waiting for potentially stronger productivity growth, because inflation remains above the Fed’s 2% target.

“Against this backdrop, forceful monetary-policy restraint on underlying inflation is essential, rather than tolerating higher inflation today in pursuit of future productivity growth,” Musalem said in prepared remarks for an event in São Paulo.

He said the central bank’s most valuable contribution to long-term economic growth is to provide a stable price environment in which businesses can plan investment and innovation, thereby supporting growth. Fed officials decided at their July 28-29 policy meeting to leave interest rates unchanged, but three officials dissented in favor of a rate increase.

Musalem, who does not have a vote on monetary policy this year, said last week that he had favored a 25-basis-point rate increase at the most recent policy meeting. He also said the selloff in U.S. Treasury bonds after the meeting underscored the importance of preserving the Fed’s credibility.

The source text contains an incomplete sentence after stating that policymakers cannot afford to tolerate more inflation while waiting for stronger productivity growth.

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Full text

Fed’s Musalem calls for forceful restraint on inflation

St. Louis Federal Reserve President Alberto Musalem said policymakers cannot afford to tolerate more inflation while waiting for potentially stronger productivity growth, because inflation remains above the Fed’s 2% target. “Against this backdrop, forceful monetary-policy restraint on underlying inflation is essential, rather than tolerating higher inflation today in pursuit of future productivity growth,” Musalem said in prepared remarks for an event in São Paulo. He said the central bank’s most valuable contribution to long-term economic growth is to provide a stable price environment in which businesses can plan investment and innovation, thereby supporting growth. Fed officials decided at their July 28-29 policy meeting to leave interest rates unchanged, but three officials dissented in favor of a rate increase. Musalem, who does not have a vote on monetary policy this year, said last week that he had favored a 25-basis-point rate increase at the most recent policy meeting. He also said the selloff in U.S. Treasury bonds after the meeting underscored the importance of preserving the Fed’s credibility. The source text contains an incomplete sentence after stating that policymakers cannot afford to tolerate more inflation while waiting for stronger productivity growth.

St. Louis Federal Reserve President Alberto Musalem said policymakers cannot afford to tolerate more inflation while waiting for potentially stronger productivity growth, because inflation remains above the Fed’s 2% target.

“Against this backdrop, forceful monetary-policy restraint on underlying inflation is essential, rather than tolerating higher inflation today in pursuit of future productivity growth,” Musalem said in prepared remarks for an event in São Paulo.

He said the central bank’s most valuable contribution to long-term economic growth is to provide a stable price environment in which businesses can plan investment and innovation, thereby supporting growth.

Fed officials decided at their July 28-29 policy meeting to leave interest rates unchanged, but three officials dissented in favor of a rate increase.

Musalem, who does not have a vote on monetary policy this year, said last week that he had favored a 25-basis-point rate increase at the most recent policy meeting. He also said the selloff in U.S. Treasury bonds after the meeting underscored the importance of preserving the Fed’s credibility.

The source text contains an incomplete sentence after stating that policymakers cannot afford to tolerate more inflation while waiting for stronger productivity growth.

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