Federal Reserve May Need More Rate Hikes to Tame Inflation

The US Federal Reserve may need to continue raising interest rates to combat high inflation, according to Alberto Musalem, president of the Federal Reserve Bank of St. Louis.

Musalem believes that without further monetary policy tightening, inflation will likely remain above the Fed's 2% target in 18 months.

He notes that persistent demand and supply-side factors continue to increase inflation risks, with core inflation approximately one percentage point above the Fed's target.

The current interest rate range of 3.75-4% is considered 'moderately accommodative' by Musalem, meaning it is not high enough to restrain economic activity.