St Louis Fed's Musalem Appears To Be On Hawkish End Of FOMC Spectrum

St Louis Fed President Musalem's first public remarks on monetary policy since becoming St Louis Fed president (speech link here) appear to put him toward the hawkish end of the FOMC spectrum, particularly with this comment regarding his criteria for supporting rate cuts:

• "I will need to observe a period of favorable inflation, moderating demand and expanding supply before becoming confident that a reduction in the target range for the federal funds rate is appropriate. These conditions could take months, and more likely quarters to play out." Most other FOMC participants have spoken in terms of "few" or "several" "months" as their core view for the time horizon, not "quarters".
• And "should evidence of alternative inflation scenarios begin to materialize, I would support an additional firming of monetary policy."
• He is not fully convinced that policy is sufficiently restrictive: "Policy appears less restrictive if the underlying rate of inflation is higher, say the 3.5% year-to-date PCE inflation rate that forecasters expect through May, or if the long-run neutral rate of interest is thought to be higher."
• "I believe the long-run neutral rate is higher than 0.5%" - that comment suggests that his addition to the Dot Plot in June was above 2.50%, thus was partly responsible for shifting up the longer-run Fed funds median to 2.75% from 2.56% in March.
• He is also unconvinced of the disinflationary signal provided by the May CPI data: "I am hopeful this could mark a resumption of progress toward 2 percent inflation. However, it takes more than one data point to establish a trend. Data for the first four months of 2024 indicated that inflation remained too high and was moving more sideways than down. Moreover, recent elevated readings on PCE inflation have been broad-based across expenditure categories of goods and services."