Fed’s Musalem:
• Supported a 25 bps cut as a precaution to help the labor market, but believes there’s limited room for further easing.
• Tariffs are adding to inflation, and their impact on prices hasn’t been fully felt yet.
• Loose financial conditions and other factors mean the Fed should be cautious about additional rate cuts.
• Putting too much emphasis on the labor market could lead to overly loose policies, doing more harm than good.
• Risks in the labor market are tilted to the downside.