St. Louis Fed President: Inflation target not yet met, supports keeping interest rates unchanged.

Alberto Musalem, president of the St. Louis Federal Reserve Bank, expressed his support for the decision by the Federal Reserve to keep interest rates unchanged last week, noting that the central bank has not yet achieved its inflation target. Musalem said at an event in Itabena, Mississippi: "The current economic situation indicates that we have not reached our inflation goal." However, he emphasized, "We have not deviated from our goal in terms of employment," and the U.S. labor market remains close to full employment. The Federal Reserve last week decided to maintain the federal funds rate target range at 4.25% to 4.5%, a level that has not been adjusted since December of last year. While most officials wanted to continue observing the impact of tariffs on inflation and economic growth, two Federal Reserve Board members still voted against it, citing concerns about a slowdown in the job market. The weak performance of the July employment report, which was below market expectations, also heightened concerns about cooling in the labor market, providing more support for the dissenting votes. Musalem had previously stated that he expected inflation pressures related to tariffs to gradually manifest in the summer, but it is currently difficult to determine whether their impact is sustainable. This statement shows that there is increasing internal disagreement within the Federal Reserve on the policy path. On one hand, inflation remains above the central bank's long-term target of 2%, leading officials to remain cautious; on the other hand, a weakening job market may lead some officials to lean towards easing policy. The market is closely watching whether the Federal Reserve will start cutting rates in the coming months. Musalem's speech emphasized that policymakers still need more time to assess economic and inflation trends in order to decide on the next steps.