Schmid: Inflation 'Stubborn' and 'Sticky', Rate Hikes Uncertain

Kansas City Federal Reserve President Jeffrey Schmid acknowledged that inflation remains stubborn and sticky, citing its resilience in recent economic data. Speaking at the Fed's annual symposium in Jackson Hole, Wyoming, Schmid said that despite efforts to combat it, inflation has proven difficult to break through.

According to Commerce Department figures released on Wednesday, core prices, excluding food and energy, rose 3.3% from a year ago, well above the central bank's 2% target. This trend is particularly concerning given the economy's growth rate of 1.5% in the second quarter and an unemployment rate of 4.1%, Schmid noted.

When asked whether the Fed's current policy rate target of 3.5%-3.75% is restrictive, Schmid hesitated to make a definitive judgment. 'I don't know what we're restricting currently with the rate policy that we're at today,' he said, implying that more information is needed before considering further action.

Although he did not express support for an interest rate hike, Schmid emphasized his need for additional data on the demand side driving growth and inflation. His views are notable given his past dissent against rate cuts last year as a voting member of the Federal Open Market Committee (FOMC). While he is no longer a voter this year, his opinions remain influential.