Kansas City Federal Reserve President Jeff Schmid said he supported this week's interest rate increase, viewing it as a necessary step to curb persistently high inflation, as the drivers extend well beyond rising oil prices. Schmid noted that even after excluding energy, inflation "has also been running too hot." He added that "a wide range of goods and services" have also seen price increases that run counter to the Fed's price stability goals.
"The Fed still has work to do on inflation, and this week's action is a step in that direction," Schmid said Friday at an event in Vail, Colorado. "Rising oil prices have been a significant driver of high inflation, but we must recognize that our inflation problem is not solely about energy." Schmid stated that the labor market appears to be in balance, while the economy continues to grow solidly. The Fed decided to raise interest rates by 25 basis points on Wednesday, with the "dot plot" indicating that most officials expect one more rate increase within the year.
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