Fed’s Schmid Explains Dissent: "Inflation is Too Hot"

Jeffrey Schmid, the Kansas City Fed President, adopts a hawkish stance driven by persistent inflation concerns. He perceives the economy as having momentum while the job market remains balanced, contrasting with the notion that employment is at risk. His main worry is that inflation is 'too hot,' questioning the adequacy of current policy to bring it down. Schmid warns against complacency regarding the Fed's credibility on price stability. Although data remains incomplete, it suggests that inflation is still high and predominantly balanced in the job market. There are ongoing concerns about inflation in the district, and current monetary policy appears only modestly restrictive. Based on this, Schmid emphasizes the necessity for monetary policy to stay modestly restrictive given the high inflation levels.