Fed's Musalem (2028 voter) says strong growth and investment influencing bond market

Businesses are facing high input costs. Inflation: Inflation expectations are anchored and on the strong growth in investment, and that is influencing the bond market. Number one concern amongst businesses is inflation. Given current Fed rates, sees lower probability of getting inflation to 2%. Underlying inflation, excluding supply‑chain effects, sits between 2.5-3%. Best thing Fed can do for growth is get inflation back to 2%. When you have supply shocks, have to look at core inflation. Fed: Fed credibility is not in question. Fed is focused on making monetary policy independent of fiscal policy. Wants to maintain an open mind into every meeting. Won't offer firm view on what he wants Fed to do at September FOMC. Monetary Policy: Monetary policy is neutral or accommodative right now. Financial conditions are pretty accomodative here. Hiking rates now could save more aggressive action later. Forward guidance is useful when rates are at zero. Supply: Super El Nino might be next supply shock. Data: Jobs report was a bit weaker than expected. Looks at soft data, hard data and surveys.