Fed's Musalem (2028 voter) says the Fed's policy rate is below long-run neutral rate and longer-term inflation expectations are drifting up, and labour market is stable
- Is prepared to adjust his policy views if evidence becomes clear that higher productivity growth is likely to ease inflation pressures.
- It is risky to rely on the prospect of higher productivity growth to solve today’s inflation problem.
- Data on the productivity effects of artificial intelligence are inconclusive, while demand pressures are real.
- The Fed needs to maintain a vigilant focus on returning inflation to its 2% target.
- Caution is needed amidst upward inflation pressures.
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