Fed Officials Warn on Inflation Risks, Rate Cuts Uncertainty

St. Louis Fed President Alberto Musalem recently expressed caution regarding inflation, highlighting the risks posed by rising inflation expectations and potential stagflation. In a speech at the Economic Club of New York, he emphasized the need for the Fed to maintain a restrictive monetary policy until there is more confidence that inflation will return to the target of 2%. Meanwhile, other Federal Reserve officials, including Atlanta's Raphael Bostic and San Francisco's Mary Daly, discussed the uncertainty surrounding future rate cuts, with Bostic suggesting two quarter-point reductions are possible this year, contingent on inflation trends. Daly echoed the sentiment that policy should remain restrictive until substantial progress on inflation is evident. The Fed has kept rates on hold after recent inflation data showed an unexpected rise, complicating the outlook for monetary policy. Overall, the prevailing view among Fed officials is to remain cautious as economic conditions evolve.