Kansas City Fed’s Schmid is preferred while maintaining fixed interest rates

Member Federal Reserve The committee that takes decisions on monetary policy said that it prefers to maintain interest rates at its current level to prevent strong levels of economic activity, which stimulates the return of inflation.

Jeffrey Schmid, head of the Federal Reserve in Kansas City, said that in his opinion, growth is strong and Inflation is still high For the goal of the Federal Reserve by 2 % – so monetary policy must remain modest.

“Although monetary policy may be currently restricted, it is not very restricted,” he said.

Schmid said that the Federal Reserve Bank is “close to achieving our double goals in stability in prices and full labor as we were for some time,” adding that “he indicates that the monetary policy position is not far from neutral … with stock prices near the heights of the records and the bonds spread near the decrease in records, I see few evidence of a very restricted policy.”

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The Federal Reserve maintained the arrangement of federal prices in the range of 4.25 % to 4.5 % in all its five meetings this year with inflation over the central bank’s goal and uncertainty about how definitions affect the prices of consumer.

The last inflation of the Consumer Prices (CPI) was 2.7 % in July, while the Federal Reserve is preferred Personal consumption expenses (PCE) The index was in 2.6 % in June.

The inflation cools a little in July of the previous month

“It is expected that there is a relatively steadfast effect of definitions on inflation, but I think that as a sign that the policy is properly calibrating instead of a sign that the policy rate must be reduced.”

“More importantly, I will not distinguish my point of view about definitions and inflation as” waiting and seeing. “As I said earlier this summer, I am not sure that we will be able to determine the contribution of accurate (or even public) definitions of inflation, given the complexity of the problem.”

Schmid said that the complexity of determining how Customs tariff costs They bear foreign exporters, importers in the United States, companies in the local supply chain, retailers and consumers in the end, are unlikely to be clear in the short term. He added that he does not believe that it is useful to distinguish between the costs of inflation and tariffs.

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He said: “I do not see any possibility that we will know the impact of definitions on prices, either as one -time shock to the level of price or the continuous inflation power, during the next few months. Also, I promise that you will not hear me talking about inflation except for the tariff, which I think is not a useful or concrete concept.”

Schmid is one of the 12 members of the Federal Open Market Committee (FOMC), which makes decisions on monetary policy movements at the Federal Reserve and will vote the following on price discounts at its meeting in mid -September.

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At the last federal reserve meeting, conservatives Michel Buman, Kristover and Er The decision is opposed To maintain fixed rates, under the pretext that reducing 25-Basis points will be appropriate to get rid of weakness in the labor market. This was the first opposition by two FOMC members in favor of price cuts since 1993. Despite opposition, FOMC 9-2 voted to leave rates unchanged, with the absence of one member.