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2025-10-31 20:31:45
[Fed Hawkish Official Explains Reasons for Opposing Rate Cut: Inflation Risks Remain] ⑴ Kansas City Fed President Schmid explicitly stated his opposition to this week's rate cut decision, expressing concern that persistently high inflation could damage the central bank's credibility. ⑵ In a written statement, Schmid explained his voting position, believing that a 25 basis point rate cut would have limited effect on easing labor market pressures. ⑶ He warned that if the market questions the Fed's commitment to its 2% inflation target, the rate cut could have a more lasting impact on inflation. ⑷ Although official data releases were suspended due to the government shutdown, recent reports show that the core PCE annual rate remains high at 2.8%. ⑸ Schmid noted that his contacts in his region are generally concerned about persistent cost increases and inflationary pressures. ⑹ Healthcare costs and insurance premiums are the primary concerns, indicating that inflation is spreading broadly across goods and services categories. ⑺ He believes that economic growth momentum remains strong, and monetary policy should continue to curb demand growth to ease price pressures. ⑻ The current policy stance is only defined as "slightly restrained," while labor market conditions are largely balanced. (9) Schmid and Federal Reserve Governor Michel both voted against the cut, but the latter supported a larger 50-basis-point rate cut.
