Jeffrey Schmid, president of the Federal Reserve Bank of Kansas City, said on Thursday that the current level of interest rates does not appear to be restricting economic activity, while signaling support for further rate increases to bring inflation back to the central bank’s 2% target.
Speaking at the annual research conference in Jackson Hole, Wyoming, Schmid acknowledged persistent inflationary pressures, stating that inflation remains "stubborn and persistent" and that the Federal Reserve must continue seeking ways to progress toward its objective. He emphasized the need for more data before making monetary policy decisions, noting that an energy shock is gradually filtering through the economy.
Schmid also highlighted the challenges ahead, including the time required to adjust the Federal Reserve’s balance sheet. He suggested there may be scope to reduce the number of policy meetings, though no specific timeline was provided. His remarks come as the Federal Open Market Committee prepares for its next policy meeting, with markets closely monitoring signals for the direction of rates.
The Kansas City Fed president’s comments underscore the central bank’s cautious approach amid evolving economic conditions, balancing the need to curb inflation against concerns over potential over-tightening.
