Federal Reserve Watch for Aug. 14: 50-Basis Point Rate Cut Not Justifiable for September Meeting, Musalem Says

02:37 PM EDT, 08/14/2025 (MT Newswires) -- St. Louis Fed President Alberto Musalem (voter) said in an interview with CNBC that it is too early to promise a rate cut at the Sept. 16-17 FOMC meeting but said that he believes that a 50-basis rate cut that some are hoping for is not justifiable in the current economic environment and outlook for economy.

Musalem, speaking after the release of much-stronger-than-expected July producer price inflation data, said that tariff price impacts are just beginning to be seen and that while he expects to see those effects to fade in six-to-nine months, they may also be more persistent.

Recent comments of note:

(Aug. 13) Atlanta Fed President Raphael Bostic (nonvoter) noted the weakness seen in the July employment data and noted that lower-income consumers and small businesses are beginning to feel the impact of tariffs. Bostic said that unemployment remains low

(Aug. 13) Chicago Fed President Austan Goolsbee (voter) said that tariffs-related price pressures have begun to be seen in the available data and said that the effects may not be transitory.

(Aug. 12) Kansas City Fed President Jeffrey Schmid (voter) said that interest rates should not be lowered right now with the economy still strong and inflation above the Fed's target. He conceded that effects of tariffs on inflation are expected to be modest and that he would alter his views on monetary policy if conditions began to deteriorate.

(Aug. 12) Richmond Fed President Tom Barkin (nonvoter) said that the FOMC is well positioned to adjust monetary policy if needed but said the balance between upward pressure on inflation and upward pressure on unemployment is still unclear and that inflation growth will depend on how consumers react to higher prices that result from tariffs.

(Aug. 12) President Donald Trump, in addition to demanding that the FOMC begin to cuts interest rates, said that he is considering allowing a "major" lawsuit against the Fed regarding the costs of renovations to the Fed's headquarters to move forward.

(Aug. 9) Fed Vice Chair for Supervision Michelle Bowman said that the weaker-than-expected July employment data bolster the case for three rate cuts this year, suggesting that labor demand has softened considerably from earlier in the year, in line with her expectations.

(Aug. 8) St. Louis Fed President Alberto Musalem (voter) said that above-target inflation and the slowing labor market are both risks to the US economic 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.

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