Kansas City Fed's Schmid Says More Restrictive Policy May Be Needed With Core Inflation at 3.8%

businessmacroeconomics 9 posts · 5 accounts

Federal Reserve Bank of Kansas City President Jeff Schmid said inflation remains the main risk and that policymakers may need to consider making policy more restrictive. He said inflation is still too hot, officials need to keep signaling their willingness to act, and he places little weight on the idea that the recent jump in prices will prove transitory.

The remarks keep the focus on the Federal Reserve's effort to return inflation to its 2% target. Core inflation rose 3.8% in April, the highest since 2023, and Schmid said now is not the time for officials to let down their guard or soften their commitment to price stability.

From the sources (9 posts)

@wallstengine

Fed’s Schmid says inflation is still the main risk and officials need to keep signaling they are willing to act. “Now is not the time to let down our guard,” he said, after core inflation hit 3.8% in April, the highest since 2023.

@business

Federal Reserve Bank of Kansas City President Jeff Schmid said he remained focused on elevated inflation

@financialjuice

Fed's Schmid: Main focus is on getting inflation back to 2% target

@financialjuice

Fed's Schmid: The Fed must signal commitment to price stability

@financialjuice

Fed's Schmid: My primary concern is inflation, which is ‘too hot’

@firstsquawk

FED'S SCHMID SUGGESTS CONSIDERING A MORE RESTRICTIVE MONETARY POLICY.

@financialjuice

Fed's Schmid: Fed must signal commitment to lowering inflation

@financialjuice

Fed's Schmid: I place little stock in believing recent inflation jump is transitory

@infoflowfx

FED'S SCHMID: MAY NEED TO CONSIDER MAKING POLICY MORE RESTRICTIVE.

Market impact

28 small

SPY TLT QQQ

Why it matters: A single KC Fed president leaning hawkish (more restrictive policy, dismissing transitory inflation) nudges rate-cut odds lower at the margin, pressuring rate-sensitive equities and long bonds, but it is one voice, not a policy decision or a fresh data surprise.

At publish time: Headline is a Fed official explicitly suggesting more restrictive policy with core inflation at 3.8% (highest since 2023) and downplaying transitory — a hawkish rate-path signal on its face.

model confidence: medium

What happened next

1–2 weeks later

played out moved down

Hawkish thesis persisted: Logan floated rate hikes, May inflation hit 4.2% (3-yr high), economists bet on higher rates under Warsh, pressuring bonds and rate-sensitive equities.

based on follow-up coverage

Follow-up coverage

Jun 3

New York Fed's Williams Sees No Need to Change Rates, Expects Inflation to Peak in Coming Months

matched on: fed's, inflation
Jun 3

Fed's Williams Sees 2% Growth, Says Persistent Inflation Isn't a Concern

matched on: fed's, inflation
Jun 3

Dallas Fed's Logan Raises Prospect of Rate Hike Later This Year as Inflation Lingers Above 2%

matched on: fed's, inflation
Jun 4

Fed's Daly Says Policy Is in Good Place, Returning Inflation to Target Is No. 1 Priority

matched on: fed's, inflation, policy
Jun 10

US Inflation Hits 4.2% in May, Highest in 3 Years; Core CPI Below Forecast at 0.2%

matched on: core, inflation
Jun 16

Fed's Warsh Promises Communication Overhaul Ahead of First Policy Meeting

matched on: fed's, policy
Jun 16

ECB's Lane Urges Policy Move Now as Inflation Seen Well Above Target in a Year

matched on: inflation, policy

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