Fed’s Musalem Backs Powell’s Wait-And-Watch Approach On Rate Cuts, Says Trump Tariffs Could Slow Down Economy

Speaking at a discussion at the Official Monetary and Financial Institutions Forum in St. Louis on Thursday, Alberto Musalem said the tariff policy will take time to settle.
The President of the Federal Reserve Bank of St. Louis Alberto Musalem leaves the end of the morning session on the last day of the 2024 European Central Bank Forum on Central Banking
The President of the Federal Reserve Bank of St. Louis Alberto Musalem leaves the end of the morning session on the last day of the 2024 European Central Bank Forum on Central Banking. (Photo by Horacio Villalobos#Corbis/Corbis via Getty Images)
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Rounak Jain·Stocktwits
Published Jul 10, 2025 | 2:27 PM GMT-04
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Federal Reserve Bank of St. Louis President Alberto Musalem on Thursday said he needs more time to understand the impact of President Donald Trump’s tariff policies on the U.S. economy.

Musalem reiterated the broader stance among the Federal Reserve’s board of governors, maintaining a cautious stance while the effects of President Trump’s tariffs percolate through the economy.

Speaking at a discussion at the Official Monetary and Financial Institutions Forum in St. Louis on Thursday, Musalem said the tariff policy will take time to settle, according to a report by Bloomberg.

“There’s a scenario where we could be in Q4 this year, or Q1 or Q2 of next year where tariffs are still working themselves into the economy,” he said.

While Federal Reserve Chair Jerome Powell and his colleagues have maintained a cautious stance and focused on keeping inflation expectations anchored, Musalem reiterated that President Trump’s tariffs carry the risk of slowing down the economy.

That said, Musalem conceded that the impact of Trump’s tariffs on inflation has been mild so far, but cautioned that their effects could be more visible in data from June through September.

“I’m not looking for a complete certainty, but I’m looking for sufficient confidence in one direction or another,” he added.

Meanwhile, U.S. equities edged up on Thursday as Wall Street digested the impact of President Trump imposing tariffs on 22 countries this week.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.34%, while the Invesco QQQ Trust (QQQ) fell 0.1%. Stocktwits data shows retail sentiment around the S&P 500 ETF has been in the ‘bullish’ territory over the past week.

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