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Fed's Musalem says no more rate cuts needed with policy now at neutral level

BY Reuters | ECONOMIC | 01:31 PM EST

WASHINGTON, Jan 30 (Reuters) - St. Louis Federal Reserve President Alberto Musalem said on Friday the U.S. central bank does not need to cut interest ?rates further unless the job market starts to ?deteriorate or inflation falls.

The current 3.50%-3.75% policy ?rate range is neutral, Musalem ?said in ?remarks prepared for delivery to an event at ?the University of Arkansas. ?With the economy expected to continue growing above trend, there is ?no need to ?add monetary ?stimulus at a time when credit conditions and fiscal policy are both serving ?as "tailwinds," he added.

"I see tailwinds supporting economic growth," Musalem said. "With inflation above target and the risks to the outlook evenly balanced, I believe it would ?be ?unadvisable to lower the rate into accommodative territory at this time."

Musalem said ?he expected inflation to decline towards the Fed's 2% target from the current level about a percentage point above that level, but he also sees risks that it could ?persist. In addition, he said there is less risk now of a "substantial deterioration" in the job market.

(Reporting ?by Howard Schneider; Editing by Paul Simao)

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