Kansas City Federal Reserve President Jeffrey Schmid voiced his support for the Fed to hold rates on Tuesday, arguing that borrowing costs should remain “somewhat restrictive” in order to bring inflation down to 2%.
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Trade QQQ with leverage“Overall, with inflation still running hot, it appears that demand is outpacing supply across much of the economy,” Schmid said in prepared remarks for an economic forum in Albuquerque, New Mexico.
Fed’s Schmid Signals No Rush to Cut Rates
Schmid added that he is open to the possibility of AI leading to non-inflationary economic growth, although the current rate of inflation suggests that scenario hasn’t arrived yet.
Schmid’s view of whether rates are restrictive or accommodative is based on how the economy performs, and he believes growth isn’t being restrained at the moment. He noted that restrictive rates allow supply to catch up with demand and work against inflationary pressures.
Last month, the Fed voted 10-2 to hold interest rates steady, and it isn’t expected to cut rates again until June, according to the odds on the CME FedWatch tool.