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09/08/24
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The Scene Is Set for Rate Cuts: Fed’s Schmid
On Thursday, one of the more hawkish policymakers at the U.S. central bank, and the President of the Kansas City Federal Reserve Bank, Jeff Schmid, said that recent data has boosted his confidence that inflation was easing.
In remarks prepared for delivery to the annual meeting in Colorado Springs of the Kansas Bankers Association, Schmid said that this paved the way for a cut in the Fed’s interest rate.
Schmid said the Fed should not be looking for the best in the data but rather the worst due to the multi-decade shock to inflation that has been experienced.
He added that prices may change and the Fed required bigger time-spans to ensure the path of inflation.
He commented that if inflation however continued to come in low, his confidence would grow that the Fed was on track to meet the price stability part of its mandate, and it would be appropriate to adjust the policy stance.
The latest inflation data indicated that inflation was at about 2.5%, while the Fed’s goal was 2%. This led Schmid to say that although the Fed was close, it was not quite there.
The Fed decided last week to keep the policy rate unchanged at the range of between 5.25% and 5.50%, where it has been for more than a year.
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