Federal Reserve Musallam: There may be room for gradual easing of policy towards neutral interest rates

There may be room for a gradual easing of policy towards neutral interest rates, and stronger data may be behind the rise in Treasury term premiums, the Federal Reserve's Mousalem said. Data since the last policy meeting suggest the economy may be much stronger than expected. Inflation data are equally strong, but have yet to change the view that policy is moving in a neutral direction. The latest consumer price index data is "in line with expectations", but would prefer to see a sustained decline on the three-month basis of the data. It also seems too hasty to include the prospects for the Trump administration of the US president-elect in December expectations. Economic activity and data have become stronger, raising the risk of an inflation rebound.