Fed’s Schmid Explains Dissent: “Inflation is Too Hot”

Jeffrey Schmid (Kansas City Fed President)

Summary: Schmid, another dissenter, takes a hawkish stance driven by persistent inflation concerns. He views the economy as having momentum and the job market as balanced, which contrasts with the idea that employment is at risk. His primary worry is that inflation remains “too hot,” and he questions whether current policy is actually restrictive enough to bring it down, warning that the Fed must not become complacent about its hard-won credibility on price stability.

• Data is still incomplete, but based on what is available, inflation remains too high while the job market seems largely in balance.

• Continue to hear concerns about inflation from people in the district.

• Monetary policy is only modestly, if at all, restrictive.

• One of the Fed’s great policy successes was in gaining credibility on inflation, and policymakers should not be complacent about maintaining it.

• The economy is showing momentum and inflation is too hot.

• Given high inflation, monetary policy should remain modestly restrictive.