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

St. Louis Fed President Alberto Musalem believes that US inflation pressures may require further rate hikes from the Federal Reserve.

In an interview with Reuters, Musalem stated that strong demand and a broader commodity price shock are keeping inflation elevated, citing the need for monetary policy to remain sufficiently restrictive to bring inflation back to target.

'I think it's crucial that policy puts a meaningful restraint on inflation,' he said, adding that this would help the Fed return inflation to its 2% target in about a year and a half.

Musalem noted that both persistent demand and recurring supply forces are contributing to elevated inflation risks, and that without further policy restraint, it is more likely for inflation to be substantially above the 2% target in 18 months than at target.