St. Louis Fed President: The path of rate cuts should be more gradual

A Federal Reserve official said he viewed last month's decision to cut rates as a "close call" because the economic outlook now appears different than when the Fed began cutting rates four months ago. St. Louis Fed Reserve President Moussallem said that by the time of last month's meeting, the risk of inflation hovering between 2.5% and 3% had increased. As a result, he believes that more caution should be exercised in further rate cuts. Moussallem had previously hinted that he supported the Fed's decision to cut rates by 50 basis points in September. "Since September last year, things have changed," he said in an interview on Thursday. "The economic data is stronger and the inflation numbers are higher than expected. So I changed my assessment of the risks," and future rate cuts "must be gradual and more gradual than I thought in September." Moussallem said the job market is in good shape and needs to be closely monitored, but "there are still inflation issues" in the Fed's mission. Because his estimate of the neutral interest rate is slightly higher than most of his colleagues, the current interest rate may be set slightly below the appropriate limit. (Jinshi)