St. Louis Fed's Musalem sees more rate hikes in the next 6 months

St. Louis Federal Reserve president Alberto Musalem said Thursday that more interest rate hikes will be needed over the next six to nine months to bring inflation down, but he didn't indicate that the central bank needs to move at its next policy meeting.

"The important thing at this point in time is to bring inflation back towards 2% in a timely manner, and it's important to contain any further broadening of inflation pressures or any second-round effects which could be coming from the negative supply shocks or the persistent demand pressures," Musalem said in a conversation with Bloomberg.

Musalem said inflation is elevated , driven by persistent demand pressures and recurring negative supply shocks, which are leading to higher energy prices .

Musalem said he typically thinks about setting a path for monetary policy somewhere between 18 months and 2 years. If "a timely manner" for lower inflation is 18 months, that suggests rates should increase further in the next six to nine months.

He said he has not prejudged the outcome of the Fed's Oct. 27-28 meeting or what he'll do at the meeting, but said, "I think that the general direction of inflation requires us to be thinking of further policy firming here."

Markets are pricing in a better-than-80% chance that the Fed holds rates steady at the end of October, while pricing in nearly 70% odds that the central bank hikes rates for a second time this year in December.

Minutes from the Fed's September policy meeting , released Wednesday, revealed that most policymakers thought another rate increase would "likely be appropriate by year end."

Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance, she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram .