MUSALEM said policymakers cannot rely on an AI-driven productivity boom to alleviate persistent inf, calling that approach risky. He said the Iran conflict has renewed upward price pressure and prompted more officials to warn that sustained high inf could require further rate hikes. MUSALEM warned the Fed's policy rate, after adjusting for inf, remains below the so-called neutral level — i.e., neither restrictive nor accommodative. He added the labor market remains firm, inf is well above the 2%

MUSALEM said policymakers cannot rely on an AI-driven productivity boom to alleviate persistent inf, calling that approach risky. He said the Iran conflict has renewed upward price pressure and prompted more officials to warn that sustained high inf could require further rate hikes. MUSALEM warned the Fed's policy rate, after adjusting for inf, remains below the so-called neutral level — i.e., neither restrictive nor accommodative. He added the labor market remains firm, inf is well above the 2% target, and longer-run inflation expectations are gradually rising.