Fed’s Musalem: Confidence to cut rates could take months and likely quarters to play out

• He needs to observe a period of favorable inflation, moderating demand and expanding supply before he will have confidence for a rate cut
• The conditions could take months, or more-likely quarters to play out
• If inflation becomes stuck meaningfully above 2% or moves higher, he would support additional tightening
• Says he will remain vigilant until inflation is clearly and convincingly on its way back to 2%
• Retail sales for May suggests aggregate demand is growing at a moderate pace so far in Q2
• Expects consumptio nto moderate in coming quarters without stalling
• Labor market no longer seems overheated but remains tight
• Expects some further cooling in the labor market in the coming months
• There are potential early signs of continued progress on inflation
• PCE should show welcome downshift in inflation in May

These are the first real comments from Musalem and he sure sounds like a hawk. He votes in 2025.

This article was written by Adam Button at www.forexlive.com.