Fed's Mousalem warns of rising inflation expectations and stagflation risks, highlighting potential difficult choices

On February 21st, Jinshi Data News, Mousalem of the Federal Reserve mentioned two major risks of inflation expectations rise and the difficult-to-manage stagflation on Thursday, highlighting the potential difficult choices facing the Federal Reserve. Mousalem said that although many of his colleagues believe that inflation expectations have been anchored, he is concerned that recent data shows that inflation expectations may be rising, which could force the Federal Reserve to take a more restrictive path. Mousalem did not give his current view on the expected rate cuts this year in his speech. However, his warning suggests that the Fed’s main tone on declining inflation and eventual further rate cuts may become more complicated, but this prospect is still the baseline forecast, even as officials acknowledge that the Trump administration’s new import tariffs and immigration rules may affect prices.