Federal Reserve's Mester: Interest rate cut aims to "insure" the job market, there is still a 50-75 basis points easing room in the future.

St. Louis Fed President Mousalem said on Thursday that the purpose of the loose monetary policy measures implemented by the Federal Reserve over the past year was "to provide protection for the labor market," and he expects there is still a policy adjustment space of 50 to 75 basis points. Mousalem stated at an event hosted by the Fixed Income Analysts Association that he tends to consider monetary policy formulation from the dimensions of "trend and level." "In terms of trend, we have accumulated a 150 basis point rate cut over the past year, the core purpose of which is to provide protection for the labor market, ensuring that the employment market remains or approaches full employment. This is the trend perspective," he said. "In terms of level, I estimate that the current protection space for the labor market is about 50 to 75 basis points, which is sufficient to support the employment market to remain close to full employment," he added. The Federal Reserve launched an easing cycle from September to December last year, but due to the impact of the Trump administration's wide-ranging tariff policies, the Federal Reserve has maintained the key interest rate unchanged in five consecutive monetary policy committee meetings this year, adopting a wait-and-see attitude. After a noticeable cooling in the labor market, the Federal Reserve implemented rate cuts again in September and October this year. Mousalem pointed out, "In terms of the financial environment, the current monetary policy is in the moderately tight to neutral range, and is gradually approaching a neutral level." He explained that his judgment on the financial environment providing support to the economy is based on a comprehensive assessment of market and credit availability. He also added that these environments "have a considerable supportive effect on economic activity, and support for the labor market is a byproduct." Regarding tariffs, Mousalem stated that U.S. trade tariffs are one of the driving factors of inflation, but as businesses delay passing on costs to consumers, their impact has diminished. He expects the impact of tariffs to start fading in the second half of next year, and inflation will return towards the 2% target. Mousalem emphasized that his forecasts are based on the assumption that the current tariff policy remains unchanged. Currently, the U.S. Supreme Court is reviewing the legality of the extensive tariffs implemented by Trump. Due to the government shutdown in October, market participants continue to lack key economic data references, having to rely on indicators compiled by private institutions. The sharp increase in job cuts data released on Thursday by the U.S. employment consulting firm Challenger Corporation directly triggered a sell-off in the stock market.