Kansas City Fed Schmid promotes the maintenance of stable interest rates

A member of the panel of the federal reserve which makes decisions concerning monetary policy declared that it promotes the maintenance of interest rates at their current level to prevent high levels of economic activity stimulating a resurgence of inflation.

The president of the Federal Reserve Bank of Kansas City, Jeffrey Schmid, said that, in his opinion on the economy, growth is solid and that inflation is still high compared to the 2% objective of the Fed – monetary policy should therefore remain modestly restrictive.

“Although monetary policy can currently be restrictive, it is not very restrictive. Given recent prices, a modestly restrictive position is exactly where we want to be,” he said.

Schmid said that the Fed is “as close to the achievement of our objectives of the double mandate of price stability and full employment as for some time”, adding that it “suggests that the position of monetary policy is not far from neutral … With the prices of close -ups and the displays of the obligations near the low records, I do not see little evidence of a very restrictive monetary policy”.

The Fed governor maintains the prospects for three interest rate drops in 2025

The Fed has held its federal rate of federal funds for a range of 4.25% to 4.5% to its five meetings this year with inflation greater than the objective and uncertainty of the central bank on the impact of prices which will have an impact on consumer prices.

The last inflation of the consumer price index (ICC) was 2.7% in July, while the FED’s favorite personal consumer expenditure index (PCE) was 2.6% in June.

Inflation cools slightly in July compared to the previous month

Schmid said that he “anticipates a relatively discreet effect of inflation prices, but I consider this as a sign that politics is appropriately calibrated rather than as a sign that the policy rate should be reduced”.

“Above all, I would not characterize my point of view on prices and inflation as” wait “. As I said earlier this summer, I am not convinced that we will never be able to identify the exact (or even general) contribution of inflation prices, given the complexity of the problem,” he said.

The president of the federal reserve, Jerome Powell, said that the central bank was well placed to respond if inflation increases or if the labor market is deteriorating. (Kent Nishimura / Getty Images / Getty Images)

Schmid said the complexity of determining how pricing costs are borne between foreign exporters, American importers, interior supply chain companies, retailers and, in the end, consumers make it unlikely that there will be short -term clarity. He added that he does not think that it is worth making the distinction between inflation and pricing costs.

The Trump administration manager said Wall Street Crain price inflation as “ wait Godot ”

“I do not see any possibility that we know the effect of prices, either as a punctual shock in terms of prices, or as an impulse of persistent inflation, in the coming months. In addition, I promise that you do not hear me to speak of inflation excluding the prices, which, I think, is neither a significant concept nor a measurable concept”, he said.

Schmid is one of the 12 members of the Federal Open Market Committee (FOMC), which makes decisions concerning the movements of the Fed monetary policy and will then vote on the rate decreases at its meeting in mid-September.

Get Fox Affairs on the move by clicking here

During the last Fed meeting, the governors Michelle Bowman and Christopher Waller dissident from the decision to maintain stable rates, arguing that a reduction of 25 basic points would be appropriate to eliminate the weakness of the labor market. It was the first dissent of two FOMC members in favor of rate drops since 1993. Despite their dissent, the FOMC voted 9-2 to leave the rates unchanged, with an absent member.