Kansas City Fed President Jeff Schmid delivered a hawkish message today, emphasizing that his primary focus remains “squarely” on the inflation outlook.
He flagged a notable increase in upside inflation risks alongside rising downside risks to employment and growth, painting a challenging picture for policymakers.
However, he emphasized, “With renewed price pressures likely, I am not willing to take any chances when it comes to maintaining the Fed’s credibility on inflation.”
Addressing the inflationary impact of tariffs, Schmid acknowledged that while economic theory suggests a one-off price shock rather than sustained inflation, he’s not inclined to rely too heavily on that assumption under current conditions.
“I would be hesitant to take too much solace from theory in this environment,” he noted, referencing recent episodes of persistently high inflation that caught many off guard.
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