Fed's Schmid (2028 voter) says little reason to cut rates; prefer to keep monpol modestly restrictive; inflation is too hot

Fed's Schmid's comments suggest a hawkish stance, emphasizing that current inflation levels justify maintaining restrictive monetary policy rather than cutting rates.

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Fed's Schmid (2028 voter) says little reason to cut rates; prefer to keep monpol modestly restrictive; inflation is too hot

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  • Cutting rates could worsen inflation without helping employment much.
  • December CPI consistent with close to 3% inflation.
  • Inflation a top concern among business contacts.
  • Monpol is currently not very restrictive and economy shows momentum.
  • Labour market stresses are structural, rate-cutting won't patch them over.
  • Tax policy and deregulation likely to boost investment, spending, and demand.
  • No room to be complacent on inflation.
Context

His view indicates that the Fed is focused on inflation as the primary concern, which could influence the market's perception of future interest rate trajectories and impact the USD against other currencies.

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