Business & Finance
Kansas City Fed President Jeffrey Schmid calls inflation 'sticky' and questions current rate policy
Speaking at the Jackson Hole symposium, Jeffrey Schmid stopped short of calling for a rate hike while assessing whether current borrowing costs remain restrictive.
The short version
- Kansas City Federal Reserve President Jeffrey Schmid stated that inflation remains stubborn, pointing to core prices rising 3.3% year-over-year against the central bank's 2% target.
- Schmid questioned whether the current target interest rate of 3.5% to 3.75% is sufficiently restrictive given ongoing economic growth and low unemployment.
- He stated he needs additional data on demand-side drivers before determining whether to support an interest rate increase, though he does not hold a vote on the FOMC this year.
Key facts
- Kansas City Federal Reserve President Jeffrey Schmid described inflation as stubborn and sticky during an interview at the annual Jackson Hole symposium.[CNBC]
- The Commerce Department reported core inflation rose 3.3% from a year prior, remaining above the Federal Reserve's 2% target.[CNBC]
- Schmid questioned if the benchmark policy rate target of 3.5% to 3.75% is restrictive alongside second-quarter economic growth of 1.5% and a 4.1% unemployment rate.[CNBC]
- Schmid expressed openness to evaluating a proposal to reduce the annual number of Federal Open Market Committee meetings from eight to six.[CNBC]
What remains uncertain
- Whether Schmid will eventually advocate for a policy rate hike remains uncertain, as he noted the need for more demand-side data on economic growth and inflation.[CNBC]