St. Louis Federal Reserve Bank President Alberto Musalem said on the 6th that the Federal Reserve should continue to curb inflation and should not ease monetary policy in anticipation of future productivity gains. Speaking at an event in São Paulo, Brazil, he noted that inflation remains well above the Federal Open Market Committee's 2 percent target and that the balance of risks is tilted toward persistent overshooting. He stressed that it is critically important for monetary policy to meaningfully restrain underlying inflation, rather than tolerating higher inflation today in pursuit of productivity gains tomorrow.
Hawkish stance supports higher policy rate.
Hawkish Fed stance may push yields up.
