St. Louis Fed's Musalem says outsized cut not supported by state of the economy - CNBC

WASHINGTON, Aug 14 (Reuters) - A half-point rate cut at the Fed's September meeting is not warranted by the current state of the economy, with the country near full employment, inflation running above the Fed's 2% target, and businesses still in the early stage of adapting to higher import taxes, St.Louis Fed president Alberto Musalem said on Thursday.

"It is unsupported by the current state of the economy and the outlook," Musalem said on CNBC, comments that followed both new data showing higher than expected increases in wholesale prices in July and recent remarks by Treasury Secretary Scott Bessent that recent weak jobs numbers could prompt a larger rate reduction at the Fed's Sept. 16-17 meeting. Though Musalem said he has raised his sense of the risks facing the labor market, "we're right in the beginning of that window" for higher tariffs to influence price, with a "reasonable probability" that price pressures could prove more persistent than expected.