Kansas City Federal Reserve president Jeff Schmid said Tuesday night that inflation is too high and bringing it down will require higher interest rates. “Given the strength of demand and investment, I do not see the current stance of monetary policy as restrictive,” Schmid said…
a speech in Omaha, Neb. “As such, I believe that bringing inflation down to the Fed’s 2% objective will require tighter policy.” Schmid, who won’t be a voting member of the Federal Open Market Committee until 2028, said while the most recent inflation data for June showed an encouraging deceleration, it would be premature to put too much weight on a single data point over recent trends. The Personal Consumption Expenditures index clocked in at 3.3% in June on a “core” basis, which excludes volatile food and energy prices
That’s down a tenth of a percentage point from 3.4% in May. Month over month, core PCE increased 0.1%, down from 0.3% in May. On a headline basis, PCE rose 3.7%, down from 4.1% in May.
He noted that volatile oil prices both pushed inflation up in prior months and contributed to the June decline. “With the price of oil once again rising, it is uncertain how persistent any relief on energy will be,” Schmid said. How oil price shocks ripple through your wallet, from gas to groceries But Schmid stressed that higher inflation isn’t solely about energy. He noted that over the previous 12 months, inflation excluding energy was 3.2%, about half a percentage point higher than where it stood in June of last year.