Emre Yumlu 
FED official Musalem, in an interview with CNBC, stated that inflation is still hovering around 3% and that tariffs are putting pressure on prices. Musalem noted that he expects most of the economic impact from higher tariffs to fade within 6–9 months but emphasized there are risks this effect could be more persistent.
Labor Market and Tariff Impact
St. Louis Fed President Musalem highlighted that the labor market remains at full employment, while both labor demand and supply have declined. However, risks on the labor side combined with tariff-driven price pressures point to the possibility that inflation could remain elevated. He also stated that a half-point interest rate cut is not supported by current economic data and conditions.
FED’s Musalem: Too Early to Speak About September
While the tariff impact is expected to diminish over the next two to three quarters, Musalem noted that some economic indicators and labor market data require more cautious action in monetary policy. Considering possible downside risks in the labor market, he said it is reasonable to expect payroll breakeven levels to remain below 50K.
Musalem’s remarks underline that inflation still needs close monitoring and that the Fed’s monetary policy decisions will be shaped in light of these risks.
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