Musalem Sees Need for More Rate Hikes to Combat Inflation Pressures

US Federal Reserve may need further rate hikes to combat strong demand and commodity price shocks that are keeping inflation elevated, according to St. Louis Fed President Alberto Musalem.

Musalem emphasized the importance of keeping monetary policy restrictive to bring inflation back to its target of 2% in about a year and a half.

He noted that both persistent demand and recurring supply forces are contributing to high inflation risks, making further policy restraint necessary. Without additional measures, inflation is likely to remain above the 2% target for another 18 months.