Fed's Schmid says high inflation still bigger issue facing central bank
Fed's Schmid says high inflation still bigger issue facing central bank
By Michael S. DerbyWed, February 25, 2026 at 6:01 PM UTC
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Kansas City Federal Reserve President Jeffrey Schmid attends the Federal Reserve Bank of Kansas City's 2025 Jackson Hole Economic Policy Symposium, "Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy", in Jackson Hole, Wyoming, U.S., August 21, 2025. REUTERS/Jim Urquhart
By Michael S. Derby
NEW YORK, Feb 25 (Reuters) - Federal Reserve Bank of Kansas City President Jeffrey Schmid said on Wednesday that overly high inflation remains a key problem the central bank needs to address, but he stopped short of saying how monetary policy should respond.
“I think we have work to do on the inflation side of things,” while “I think we're in a pretty good place for employment,” Schmid said in an appearance before the Economic Club of Colorado.
The bank president did not, however, say how that mix of factors is influencing his outlook for monetary policy. Schmid was a skeptic of the Fed’s push to lower the cost of short-term borrowing last year that saw officials lower their target rate range to between 3.5% to 3.75%.
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Markets expect more Fed rate cuts this year but officials have offered little guidance, with many watching for evidence that inflation is moving down toward the Fed's 2% target.
The Fed's rate cuts last year sought to bolster a softening job market while retaining enough policy restraint to keep inflation moving down.
Schmid also addressed the Fed’s balance sheet and said internal debates focus on understanding the right level of reserves for the financial system.
He noted that the Fed’s still-large holdings of mortgage bonds from past buying efforts were holding down home borrowing costs. Mortgage rates are “probably 75 to 100 basis points lower today than they would otherwise be” due to the current size of Fed mortgage bond holdings, he said.
(Reporting by Michael S. Derby; Editing by David Gregorio)
Source: “AOL Money”
