Federal Reserve Watch for Aug. 8: Musalem Sees Risks From Both Side of Mandate

02:34 PM EDT, 08/08/2025 (MT Newswires) -- St. Louis Fed President Alberto Musalem (voter) said that above-target inflation and the slowing labor market are both risks to the US economy and that policy makers need to decide which is the bigger problem and by how much when charting the path for monetary policy.

Musalem said that it is likely that the impact of tariffs on inflation will only be short-term but noted there is a chance that they could have a more lasting effect.

Recent comments of note:

(Aug. 7) President Trump nominated Council of Economic Advisers Chair Stephen Miran will fill Governor Adriana Kugler's seat on the Fed board for the remainder of her term that runs through January. It is possible that Miran could be available to vote at the FOMC's September meeting.

(Aug. 7) Atlanta Fed President Raphael Bostic (nonvoter) said that he still sees one rate cut as appropriate for this year even as the July employment data, particularly the large revisions to previous months, suggest a greater risk to that side of the Fed's mandate. Bostic added that the uncertainty in the current environment makes it harder to predict the appropriate policy path going forward, with the key question being whether the inflation impact from tariffs turns out to be a one-time event or more persistent.

(Aug. 6) San Francisco Fed President Mary Daly (nonvoter) said that the FOMC will probably need to reduce its target rate for the federal funds rate in the near term due to a slowing labor market, even if tariffs lift inflation temporarily over the next few months.

(Aug. 6) Minneapolis Fed President Neel Kashkari (nonvoter) said in an interview on CNBC that it is time to begin lowering the federal funds rate, adding that he sees two rate cuts as appropriate this year, with possibly more or less stimulus needed depending on conditions and the impact of tariffs.

(Aug. 4) San Francisco Mary Daly (nonvoter) said that the timing of the next rate cut is getting closer, neither promising nor ruling out a reduction at the next FOMC meeting in September. Daly said that two rate cuts this year still appear to be appropriate with the possibility of less or more depending on conditions.

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