A Federal Reserve official confirmed support for a rate hike last week and warned of persistent inflation pressures, signaling incremental tightening ahead.
Federal Reserve policymaker Musalem confirmed he advocated for a rate hike at the latest FOMC meeting, where rates were held steady. His stance removes ambiguity about his hawkish positioning, reinforcing expectations for gradual tightening rather than abrupt moves.
Musalem cited underlying inflation running between 2.5% and 3% and potential supply shocks from El Nino as key risks. He argued incremental hikes are less disruptive than larger adjustments, supporting short-end yields and the dollar without triggering sharp repricing.
The comments add to concerns over inflation persistence, with risk-sensitive currencies like the Australian dollar vulnerable to further softening if his views gain broader support among FOMC voters.