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Fed Musallam: The 50 basis point rate cut in September is not supported by economic conditions.
On August 14, Fed's Musalem stated that it is still too early to decide whether to cut interest rates at next month's meeting. When asked if there is reason to cut rates by 50 basis points next month, Musalem indicated that from his perspective, this would "not be supported by the current economic conditions and economic outlook." Musalem noted that on one hand, "the data is starting to give us some indications of whether there is a possibility of persistent inflation."
At the same time, he mentioned the "downside risks to the labor market." Musallam stated that the slowdown in U.S. economic growth, coupled with tariffs putting pressure on corporate profit margins, could threaten the labor market, which has performed well so far. He said, "I am weighing these two factors, and when we see tension between the two goals, a balanced strategy needs to be taken."