St. Louis Fed President Alberto Musalem said the Federal Reserve may need to raise interest rates further because resilient demand and persistent supply-side cost pressures are keeping inflation risks elevated. Musalem said the current 3.75%-4.00% policy rate remains accommodative and argued that earlier, incremental tightening would be less disruptive than delaying action. The Personal Consumption Expenditures Price Index rose 3.7% in July from a year earlier, up from a recent 2.3% low in April 2025, while tariffs, the US-Israeli war with Iran, fuel costs and rising commodity prices have added to price pressures. He said the labor market was stable, balanced and near full employment, and that further restraint need not require higher unemployment or a recession.