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Kansas City Fed President Schmid Questions if Current Interest Rates Are Restrictive
cnbc · 2026-08-27
Jeffrey Schmid of the Kansas City Fed warns that inflation remains persistent and suggests the current policy rate may not be sufficiently restrictive.
What Happened
Inflation Persistence and Policy Stance: Kansas City Fed President Jeffrey Schmid characterized current inflation levels as stubborn and sticky, emphasizing that the central bank faces significant challenges in reaching its 2% target. He expressed skepticism regarding whether the current policy rate of 3.5%-3.75% is truly restrictive enough to curb ongoing price pressures.
Economic Data Context: The remarks follow recent Commerce Department reports indicating that core inflation remains elevated at 3.3% annually, significantly above the Fed's mandate. With the economy maintaining growth and unemployment at 4.1%, Schmid highlighted the difficulty in assessing the impact of current monetary policy on market behaviors.
Future Policy Uncertainty: While Schmid acknowledged the need for further action to address inflation, he stopped short of explicitly calling for an immediate interest rate hike. He noted that he requires more data regarding the demand side of the economy before committing to a specific path for future FOMC decisions.
Governance and Meeting Structure: Beyond immediate monetary policy, Schmid commented on potential administrative changes within the Federal Reserve. He expressed openness to a proposal that would reduce the frequency of FOMC meetings from eight to six per year to streamline the central bank's decision-making process.