Fed’s Musalem (2028 voter) says moving sooner with rate hikes lessens risk of a hit to the broader economy; inflation still too high and unlikely to ease without Fed action; best thing the Fed can do now is restore price stability

Fed will need to raise interest rates again 'soon'. Incremental changes in rates better than abrupt changes. Higher long-term bond yields driven by expected higher policy rates. Monetary policy is accommodative right now; overall financial conditions remain accommodative. Financial conditions tighter, but not by much. Broader economy and job market strong. Risks still skewed towards higher inflation. Musalem outlines two scenarios for inflation: Scenario 1, which he says is more likely: Inflation stays too high unless the Fed raises rates further. Scenario 2, which he says is less likely but plausible: No more hikes needed.