Fed's Schmid: Interest rates "have been adjusted appropriately", inflation risks should be watched

Kansas City Fed President Schmid said on Monday that he preferred not to cut interest rates further, saying the Fed should continue to focus on the risk of too much inflation as it balances the twin risks of too tight and too loose policy. Schmid supported the Fed's decision to cut interest rates by 25 basis points in September, saying it was appropriate risk management in the context of a cooling labor market. But he noted that various indicators showed the overall job market remained healthy, while inflation remained too high, with services inflation holding steady at about 3.5 percent in recent months, well above the Fed's 2 percent inflation target. " One worrying sign is that the range of price increases is also widening, "Mr. Schmid said, noting that almost 80 per cent of the categories in the official inflation tally had seen price increases through August, up from 70 per cent at the start of the year. He added:" Overall, I expect the impact of tariffs on inflation to be relatively modest, but I think it is an indication that policy has been properly calibrated, rather than an indication that policy rates should be cut significantly. " (Jin Ten)