Schmid: Inflation Running Above 3% Supports Rate Hike

Kansas City Fed President Schmid has commented on the current economic situation.

• He backed the recent rate increase, noting that latest figures point to inflation exceeding 3%.
• The move was aimed at making progress toward the 2% objective.
• He described the inflation issue as broader than just energy costs, with price increases appearing across a wide range of goods and services.
• Elevated inflation reflects an imbalance between supply and demand.
• Excluding inflation, the economy continues to show strength.

His remarks carry a hawkish tone. Schmid endorsed the recent hike and referenced data indicating inflation is running above 3%, characterizing it as widespread rather than energy-specific — that "hot" description across various sectors suggests he views underlying price pressures as persistent rather than temporary. Combined with his comments on supply-demand imbalance, this reinforces the view that he considers current policy appropriate, or perhaps requiring additional action, to achieve the target.

One counterbalancing element is his assessment of the broader economy — apart from inflation, he notes it is performing well, indicating the tightening argument is not based on growth concerns but straightforwardly on inflation. Next to watch: upcoming inflation reports or FOMC statements that could either support the above-3% trend he cites or contradict it.