Schmid: Current Interest Rates Not Restraining Economy

Kansas City Fed President Jeffrey Schmid maintained his hawkish stance on interest rates, stating that current rates are not restraining economic activity. He emphasized that it's unclear what interest rate setting is needed to bring inflation back down to the 2% target.

Schmid also dismissed rumors about a lack of independence at the Federal Reserve, saying that the US midterm elections won't influence monetary policy decisions. He added that he would have supported a rate hike at the July FOMC meeting if he was a voter.

The president warned that energy costs are beginning to spill over into the economy, which could warrant a tighter monetary policy to lean against inflationary pressures. This hawkish stance is well known among traders, who are waiting for Fed Chair Warsh's speech tomorrow before making any moves.