Fed right to cut rates to support job market, Musalem says

Core Viewpoint - The Federal Reserve has appropriately cut interest rates to support the job market while being cautious about above-target inflation [1][3]. Group 1: Interest Rate Cuts - The Federal Reserve lowered its interest rate target by a quarter percentage point to between 3.75% and 4% in late October, following a similar cut in September [3]. - The cuts are seen as necessary to support a cooling job market despite concerns about high inflation [3]. Group 2: Financial Conditions - Current monetary policy is described as being between modestly restrictive and neutral, approaching a neutral stance regarding financial conditions [2]. - Financial conditions are viewed as supportive of economic activity and the labor market, based on a broad assessment of markets and credit availability [2]. Group 3: Inflation and Tariffs - U.S. trade tariffs have contributed to inflation, but their impact has been mitigated as companies have refrained from passing costs onto consumers [4]. - It is anticipated that the impact of tariffs will begin to diminish in the second half of next year, allowing inflation to trend back towards the 2% target [4].