Fed Officials Warn of Stubborn Inflation Ahead of Jackson Hole Conference

As the Jackson Hole conference gets underway, Federal Reserve officials are voicing concerns about inflation. Kansas City Fed President Jeffrey Schmid said that US inflation is 'still stubborn and it's still sticky' and needs to be brought back down to 2%. He noted that the current policy rate of 3.50%-3.75% does not appear restrictive, suggesting that rates may need to rise further.

Schmid's comments were echoed by Chicago Fed President Austan Goolsbee, who called the environment in which inflation has been running above target 'disturbing'. He expressed concern about rising energy costs tied to the war in Iran and constant tariff oscillations, saying that households are being hit at a time of unacceptably high inflation.

Goolsbee also warned that there is a danger the public could shift toward a view that above-target price pressures are not going away. However, he noted that the recent three-month inflation trend 'doesn't look terrible'. He added that if evidence showed inflation heading back to 2%, the Fed's policy rate could be lowered over time.