A non-voting Fed official signals persistent inflation concerns, lifting year-end rate hike expectations by 15 bps.
Federal Reserve policymaker Schmid emphasized inflation remains above the 2% target and cautioned against premature easing. His remarks reflect growing hawkish sentiment within the central bank, despite his non-voting status this year.
Fed funds futures now price in approximately 15 bps of rate hikes by year-end, up from recent weeks, as bond yields climb. Schmid noted steady economic growth and a balanced labor market but dismissed the idea that recent inflation spikes were transitory.
Markets reacted by adjusting Fed policy expectations, with traders eyeing a potential late-year rate increase. The shift underscores broader inflation concerns amid resilient economic data.