Kansas City Federal Reserve Bank President Jeffrey Schmid, speaking with the Kansas Bankers Association’s annual meeting in
Colorado Springs,
Colorado:
If inflation continues to come in low, it will be appropriate to adjust policy.
Current stance of Fed policy is ‘not that restrictive.’
Financial conditions can impact real economy, but Fed must remain focused on dual mandate.
Fed is close but ‘still not quite there’ on reaching 2% inflation goal.
More confident that inflation is on path to target, given recent ‘encouraging’ inflation data.
Price data is volatile, should look for the worst in the data rather than the best.
Has been ‘noticeable cooling’ of labor market, but overall it still appears healthy.
Cooling labor market is a necessary condition for easing inflation.
The story could change if conditions were to weaken considerably.
Path of Fed policy will be determined by data, and strength of economy.
Would not want to assume any particular path or endpoint for policy rate.
Schmid favours a more hawkish outlook than many of his colleagues, but he sounds middle-of-the-road here.
He is highlighting the next data point coming, CPI next week:
US inflation will be “modestly firmer” in July, still supportive of a Fed rate cut in September
This article was written by Eamonn Sheridan at www.forexlive.com.
