DENVER--Kansas City Federal Reserve President Jeffrey Schmid said Tuesday he remains opposed to additional interest-rate cuts, arguing inflation remains too high and the labor market appears balanced, Reuters reported.
Speaking to the Metro Denver Executive Club, Schmid said inflation has exceeded the Federal Reserve’s target for nearly five years and that strong demand—particularly for services—continues to outpace supply. “I don’t think we have room to be complacent,” he said, noting inflation is still running near 3%.
Schmid, who dissented on two Fed rate cuts last year, supported the central bank’s decision last month to hold short-term borrowing costs in the 3.50% to 3.75% range. He noted that even a one-percentage-point rise in inflation reduces U.S. household purchasing power by roughly $300 billion.
Financial markets had expected weaker labor data or easing inflation to prompt a rate cut by midyear, but those expectations have shifted later in the year amid geopolitical tensions and persistent price pressures. Schmid also said it is too early to assume artificial intelligence will boost productivity enough to allow faster growth without fueling inflation.