Key facts
- Kansas City Fed President Jeff Schmid described current inflation as 'concerning,' running roughly double the Fed's 2% target.
- Schmid stated that inflation across a broad range of goods and services is persistent and remains the focus of monetary policy.
- He expressed skepticism about inflation being temporary, particularly with rising oil prices.
- Schmid highlighted the need for transparency to maintain the Fed's accountability and independence.
- Investors anticipate a potential rate increase in September.
Kansas City Fed President Jeff Schmid stated on Thursday that inflation is proving persistent across a broad range of goods and services, and remains the focus of monetary policy given a stable labor market. Schmid, who is not a voter this year on interest rate policy, called current inflation running roughly double the Fed's 2% target 'concerning.' He disagreed with those who feel it is the result of one-time factors like high oil prices and is thus likely to dissipate on its own, stating, 'I am uncomfortable ever assuming that a burst of inflation is likely to be temporary.' Schmid added that it would be premature to put too much weight on a single data point relative to recent trends, especially with oil prices rising again. The Fed is scheduled to meet on July 28-29, with some policymakers indicating a potential rate increase if inflation does not subside. Investors are expecting a rate hike in September. New Fed Chairman Kevin Warsh has indicated a desire for a more rigorous approach to forward guidance on interest rates. Schmid also emphasized the importance of transparency and accountability for the Fed's independence, stating that clear explanations of decisions are necessary to avoid perceptions of political influence.