Key Facts
• August 21, 2025: Kansas City Fed President Schmid comments on monetary policy.
• Inflation remains above the Federal Reserve’s 2% target.
• Labor market remains strong despite recent weak employment statistics.
• Current policy rate set at 4.25–4.50% is not seen as overly restrictive.
• Schmid emphasizes need for clear data before policy changes.
• Inflation risks outweigh risks of labor market deterioration.
• Schmid warns against premature rate cuts affecting inflation expectations.
• Tariff measures under Trump administration may increase inflation risks by year-end.
• Businesses may lean toward price hikes in Q3 and Q4.
• Schmid holds voting rights in 2025 Federal Open Market Committee (FOMC).
Summary
Kansas City Federal Reserve President Schmid stated on August 21, 2025, that there is no urgency to lower interest rates as inflation remains above the Federal Reserve’s 2% target and the labor market remains robust. Speaking ahead of the Jackson Hole Symposium, Schmid highlighted that inflation risks currently outweigh concerns about labor market deterioration. She stressed the importance of clear data before making policy changes and cautioned against premature rate cuts that could impact inflation expectations. Despite recent weak employment data, Schmid noted optimism among businesses and stated that the current policy rate of 4.25–4.50% is not overly restrictive. Additionally, she warned that tariff measures from the Trump administration could elevate inflation risks by year-end, with businesses potentially leaning toward price increases in the latter half of the year. Schmid, a voting member of the 2025 FOMC, emphasized the challenges of returning inflation to target levels and the need for careful policy decisions.
