Kansas City Fed President Schmid Calls for Tighter Policy Amid Persistent Inflation Concerns
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- Fed’s Schmid advocates tighter policy to reach 2% inflation target.
- Views current policy as not restrictive and inflation as “too high.”
- Highlights AI investment as a novel inflation driver.
Federal Reserve Bank of Kansas City President Jeff Schmid stated on Wednesday that tighter monetary policy is required to bring inflation back to the 2% target. Schmid characterized the current Fed policy stance as not restrictive, expressing concern that inflation remains “too high” and “worrisome.” He also highlighted AI investment as a factor potentially fueling inflation, a relatively novel perspective, and indicated skepticism that recent inflation deceleration marks a confirmed trend. While acknowledging resilient economic growth and a balanced labor market, Schmid emphasized the PCE price gauge as the preferred method for assessing inflation. His remarks align with other hawkish voices within the Federal Reserve, reinforcing market expectations for a potentially higher path for policy, despite him not being a voting member of the FOMC this year.