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2026-05-29 18:26:49
[Fed's Schmid: Inflation "Too Hot" is Top Concern; Oil Price Shock Cannot Be Assumed to be Temporary] ⑴ Kansas City Fed President Schmid said on Friday that inflation is "too hot" and has been above target for too long, which is his top concern. He is not convinced that the recent price increases are temporary within an acceptable timeframe, and now is not the time to let his guard down. Schmid did not specify the specific impact of his inflation concerns on monetary policy. ⑵ Schmid noted that the U.S. economy is less exposed to energy shocks than in the past, but rising gasoline prices will still weaken consumer spending power. Despite higher oil prices, U.S. energy companies have not increased production. He found high caution in his conversations with companies, noting that they have shifted to stricter capital discipline over the past decade and are unwilling to increase production during periods of high price uncertainty. ⑶ Schmid believes that most economic indicators show continued steady growth, and the labor market is in a balanced state, partly boosted by hiring in the healthcare industry. There is evidence that artificial intelligence is suppressing hiring but has not driven layoffs. The market has shifted from expecting rate cuts this year to a possible rate hike, and some Fed officials have indicated that monetary policy may be tightened if inflation does not subside.
