Fed’s Schmid Rejects Preemptive Rate Cuts, Favors ‘Patient’ Approach

==========

Federal Reserve Bank of Kansas City President Jeffrey Schmid rejects preemptive rate cuts and favors a 'patient' approach. Schmid believes policymakers should wait for 'clear and convincing' evidence that inflation is headed back toward 2% before lowering interest rates. He states that the current stance of monetary policy is appropriate, given inflation running above target, economic growth continuing to show momentum, and elevated prices across asset markets. Recent price pressures have been concentrated in the services sector, supported by a tight labor market. Schmid believes a better balance between the supply and demand for labor will likely be needed for the Fed to achieve price stability. Recent inflation data has been higher than hoped, with consumer prices excluding food and energy climbing 0.4% in March and 3.8% from a year earlier. Schmid emphasizes the need for the Federal Reserve to be patient and wait for clear evidence of sustainable inflation before adjusting policy. Investors are now betting on just two rate cuts this year, beginning in September. Other Fed officials, including Boston Fed President Susan Collins and Chicago's Austan Goolsbee, also shared their views on interest rates. Schmid prefers a 'much smaller' Fed balance sheet with a shorter average maturity, primarily composed of Treasury securities.

#FederalReserve #InterestRates #Inflation #JeffreySchmid

https://finance.yahoo.com/news/fed-schmid-rejects-preemptive-rate-173500872.html