Kansas City Federal Reserve President Jeffrey Schmid has been the most skeptical of the expected September interest rate cut. In an interview on “Squawk Box” that aired Thursday morning, Schmid pointed to the still-persistent effects of inflation. He underscored that before policymakers can consider increasing the rate, they need to address these root causes.
Schmid is a voting member of the Federal Open Market Committee (FOMC) this year. His prospective viewpoint would play a big role in shaping the future discussions. He argued that the inflation number is probably closer to three percent, not two. That just means we have to keep our eyes open and keep our ears attuned.
“We might see a tick up. I would say that the inflation number’s probably closer to three than it is two, and I think we’ve got some work to do,” Schmid stated during the interview. His remarks arrive as markets are pricing in an 80 percent likelihood of a quarter percentage point cut. Such a reduction is anticipated at the next FOMC meeting, September 16-17.
Schmid went to bat against market expectations that the ECB would deliver a clear rate cut next month. He mentioned, “We’re in a really good spot, and I think we really have to have very definitive data to be moving that policy rate right now.” This position further suggests that he will not be in favor of a rate cut at the next meeting in September.
Additionally, Schmid pointed to the state of the labor market as being “solid” as another factor that could affect the FOMC’s decision-making. Second, he understood that inflation is an important issue that deserves deep consideration prior to the September markup. He stressed the importance of additional analysis before any changes are made to policy.
“Great steel is tested by fire. So, so let’s have the conversation. And that’s why it is so important for the American public to understand what the Fed is and does, to understand the value that we bring,” he said.
While Schmid focused on economic matters, he declined to comment on the case against fellow Fed member Lisa Cook, stating, “We have responsibilities as professionals, inside the Federal Reserve. I’m sure she’ll handle matters as she needs to handle them.”