Federal Reserve signals more inflation work as markets price December rate rise
Price pressures in the U.S. remain above the Federal Reserve's target as policymakers weigh whether tighter policy is still needed. Kansas City Federal Reserve President Jeff Schmid says inflation is running too hot and argues the central bank retains the tools and responsibility to bring it back under control.
Highlights
- Schmid states inflation remains 'uncomfortably above' the Fed's 2% target and attributes persistent price pressures to strong demand, not just supply shocks.
- The Fed raised rates by 0.25 percentage points in September to 3.75%–4.00%, then held steady at the most recent meeting.
- Interest rate futures fully price in a 0.25-point December hike, with some odds for a 0.5-point move after higher-than-expected inflation data and hawkish Fed commentary.
Schmid outlines case for tighter inflation response
As reported by Reuters, Schmid tells a credit union conference in Hawaii that inflation is "uncomfortably above" the Fed's 2% price stability target and is moving in the wrong direction. He does not explicitly call for another rate increase, but rejects arguments that current price pressures are beyond the central bank's reach.Schmid says recent narratives that blame inflation mainly on repeated supply shocks miss the role of demand in driving prices higher. In his view, supply disruptions lift prices in a context of strong demand, meaning the Fed can still influence inflation through its effect on demand conditions.
He also disputes the idea that demand-linked inflation tied to the artificial intelligence buildout is resistant to monetary policy. Schmid says meeting the inflation goal does not require targeting any particular category of prices, including AI-related technology goods, and insists the Fed still has the tools to restore price stability.
Rate path expectations shift after recent data
The Fed raises rates by a quarter percentage point in September to 3.75% to 4.00%, but leaves them unchanged at last month's meeting. Schmid is not a voting member of the Federal Open Market Committee this year, though his remarks add to a broader chorus of officials stressing concern about inflation.After inflation readings come in higher than expected and other Fed officials, including Governor Christopher Waller, also strike a firmer tone, interest rate futures markets are now fully pricing in a quarter-point increase at the December meeting. Markets also assign a small probability to a half-point move, underscoring how investors are reassessing the near-term policy outlook.
We recently reported on Bank of England rate rises as policymakers weighed proactive tightening against persistent inflation risks.
Latest Centralbanks News
-
Afghanistan
-
Albania
-
Algeria
-
Angola
-
Argentina
-
Armenia
-
Australia
-
Austria
-
Azerbaijan
-
Bahamas
-
Bahrain
-
Bangladesh
-
Belarus
-
Belgium
-
Bolivia
-
Botswana
-
Brazil
-
Brunei
-
Bulgaria
-
Cambodia
-
Cameroon
-
Canada
-
Chile
-
China
-
Colombia
-
Congo
-
Costa Rica
-
Cote d'Ivoire
-
Croatia
-
Cuba
-
Cyprus
-
Czechia
-
DR Congo
-
Denmark
-
Dominican Republic
-
Ecuador
-
Egypt
-
El Salvador
-
Estonia
-
Eswatini
-
Ethiopia
-
Finland
-
France
-
Georgia
-
Germany
-
Ghana
-
Greece
-
Haiti
-
Hong Kong
-
Hungary
-
India
-
Indonesia
-
Iran, Islamic republic
-
Iraq
-
Ireland
-
Israel
-
Italy
-
Jamaica
-
Japan
-
Jordan
-
Kazakhstan
-
Kenya
-
Korea
-
Kuwait
-
Kyrgyzstan
-
Laos
-
Latvia
-
Lebanon
-
Lesotho
-
Libya
-
Lithuania
-
Luxembourg
-
Madagascar
-
Malaysia
-
Malta
-
Mauritius
-
Mexico
-
Moldova
-
Mongolia
-
Montenegro
-
Morocco
-
Mozambique
-
Myanmar
-
Namibia
-
Nepal
-
Netherlands
-
New Zealand
-
Nigeria
-
North Macedonia
-
Norway
-
Oman
-
Pakistan
-
Palestine
-
Panama
-
Papua New Guinea
-
Paraguay
-
Peru
-
Philippines
-
Poland
-
Portugal
-
Puerto Rico
-
Qatar
-
Reunion
-
Romania
-
Rwanda
-
Saudi Arabia
-
Serbia
-
Singapore
-
Slovakia
-
Slovenia
-
Somalia
-
South Africa
-
Spain
-
Sri Lanka
-
Sweden
-
Switzerland
-
Syria
-
Taiwan
-
Tajikistan
-
Tanzania
-
Thailand
-
Trinidad and Tobago
-
Tunisia
-
Turkey
-
UAE
-
Uganda
-
Ukraine
-
United Kingdom
-
United States
-
Uruguay
-
Uzbekistan
-
Venezuela
-
Vietnam
-
Yemen
-
Zambia
-
Zimbabwe
- Forex
- Crypto
