Kansas City Fed President Jeffrey Schmid said inflation remains too high and “sticky,” signaling that policymakers still have work to do despite uncertainty over the next move in interest rates.
Speaking at the Jackson Hole symposium, Schmid said core inflation remains well above the Fed’s 2% target. He also pointed to second-quarter GDP growth of 1.5% and a 4.1% unemployment rate as signs that the economy may be strong enough to withstand current borrowing costs.
Schmid said he is not convinced that the Fed’s current 3.5%-3.75% policy rate is restrictive enough to meaningfully slow the economy. At the same time, he stopped short of endorsing a rate hike, saying he wants more information on what is driving demand, growth and inflation.
Schmid, who is not a voting member of the FOMC this year, also expressed openness to reducing the number of Fed meetings to six a year from the current eight. The idea was previously raised by Fed Chairman Kevin Warsh and could become part of a broader discussion about how the central bank communicates and sets policy.
