Kansas City Fed’s Schmid Says Inflation Still Too High, Fueling Bets on Later Rate Cut
Summary
- Jeff Schmid, president of the Federal Reserve Bank of Kansas City, said US inflation remains too high.
- Markets are increasingly betting the timing of a Federal Reserve interest-rate cut could be pushed back further.
- Investors are watching whether monetary policy will maintain a restrictive stance for longer than expected as Fed officials continue to sound cautious on inflation.
Forecast Trend Report by Period
Jeff Schmid, president of the Federal Reserve Bank of Kansas City, said US inflation remains too high, reinforcing market expectations that the Federal Reserve could delay interest-rate cuts.
Walter Bloomberg reported on June 4 that Schmid said “inflation is still too high” and that, despite a five-year fight, the Fed is still working to bring it under control.
He also said it was too early to conclude that inflation, while easing from its peak, is on track to sustainably reach the Fed’s 2% target.
The remarks came after the International Monetary Fund recently cited higher tariffs and rising energy prices as upside risks to inflation.
Fed officials have also raised concerns that higher energy prices tied to the recent Middle East conflict, along with the effects of tariff policy, could complicate the path back to price stability.
Markets are watching whether monetary policy will remain restrictive for longer than expected as Fed officials continue to strike a cautious tone on inflation.
