Kansas City Fed President Jeffrey Schmid Suggests September Rate Hike

Federal Reserve Bank of Kansas City President Jeffrey Schmid suggested that a higher interest rate might be appropriate as early as September 16. Speaking at the annual economic symposium in Jackson Hole, Wyoming, Schmid characterized inflation as stubborn and sticky, noting that it remains well above the central bank's 2% target.

Schmid questioned whether the current federal funds rate target of 3.5%-3.75% is truly restrictive, citing a second-quarter economic growth rate of 1.5% and an unemployment rate of 4.1%. He described current policy as potentially accommodative on the short end and warned that the Federal Open Market Committee will face significant challenges in the upcoming cycle.

Beyond interest rates, Schmid expressed support for a proposal by Chairman Kevin Warsh to reduce the number of annual FOMC meetings from eight to six. He argued that fewer meetings could increase effectiveness if the Federal Reserve improves real-time data connectivity with the banking industry to reduce data lags. Schmid also asserted that upcoming election dates, including October 28, do not influence his decision-making process.