Alberto Musalem on interest rates
From Fed's Musalem Says He Expects Warsh Will Consult, Try and Steer FOMC · · Bloomberg Podcasts
“Our mandate is price stability and maximum employment. Uh, and right now we're we're above target on inflation. And so, uh, the possibility or probability that we might consider an interest rate increase in the future, I think has to be greater than zero.”
On , Alberto Musalem, President and CEO at Federal Reserve Bank of St. Louis, spoke about interest rates during Fed's Musalem Says He Expects Warsh Will Consult, Try and Steer FOMC on Bloomberg Podcasts.
About Alberto Musalem
Alberto Musalem, president and CEO of the Federal Reserve Bank of St. Louis, said in May 2026 that he expects new Federal Reserve Chair Kevin Warsh to consult with the Federal Open Market Committee and steer members toward fulfilling the Fed's dual mandate. Musalem described Warsh's approach as "refreshing" and said a new leader should come in with a vision and ask deep questions about past operations. Speaking at the Reykjavik economic conference, Musalem said he supported the FOMC's decision to hold the policy rate but thought the easing bias was no longer consistent with the balance of risks, which he said had shifted toward inflation. He stated that the possibility of an interest rate increase in the future "has to be greater than zero" and outlined a scenario where inflation remains high and the economy would "probably require a hike." He also noted a scenario where the economy weakens materially, which could lead to no hikes or a cut. Musalem said the real policy rate was running at around half a percent, below the committee's estimate of the neutral rate. He described himself as an AI optimist but called it a "risky proposition" to rely on AI-driven productivity gains to reduce inflation, adding that at present AI is more of a demand story than a supply story. In March 2026, Musalem said he supported the FOMC's decision to hold the policy rate and believed it appropriately balanced risks to the dual mandate. He said he could support raising the rate if core inflation or inflation expectations moved persistently higher, and could support additional easing if a greater risk of a weakening labor market became apparent.