US Inflation Pressures May Require Further Fed Rate Hikes: St. Louis Fed President

St. Louis Fed President Alberto Musalem believes that further rate hikes from the US Federal Reserve may be necessary to combat strong demand and a broader commodity price shock keeping inflation elevated.

Musalem emphasized the need for monetary policy to remain sufficiently restrictive to bring inflation back to target, stating that 'I think it's crucial that policy puts a meaningful restraint on inflation.'

The current rate of underlying inflation is running about one percentage point above the Fed's 2% target and is 'moving in the wrong direction,' according to Musalem.

Musalem pointed out that even after excluding the impact of oil and other supply-related factors, the Personal Consumption Expenditures (PCE) Price Index rose 3.7% year-over-year in July, compared to a recent low of 2.3% in April 2025.