Kansas City Federal Reserve President Jeff Schmid said Sunday that inflation remains too high and the central bank faces a tougher path to price stability.
“The Fed does have the tools to address inflation and has the responsibility to achieve price stability,” he said in prepared remarks for a Hawaii conference.
For investors, his comments reinforce the prospect of further interest-rate increases, which could raise borrowing costs and pressure stock valuations. Markets expect a December hike and largely anticipate another in January, following September’s increase and October’s pause.
The Fed’s preferred inflation measure reached 3.6% in September, well above its 2% goal. Meanwhile, core consumer prices have exceeded forecasts for three consecutive months, prompting some officials to consider faster tightening.
Schmid identified energy, tariff-related increases in durable goods prices, artificial intelligence investment and healthcare as inflation drivers. He cautioned against assuming that price increases stemming from oil or tariffs would fade quickly.
Despite persistent inflation, Schmid described economic growth as proceeding at a “solid pace,” with unemployment low. He said wages and labor market conditions do not appear to be significant sources of price pressure.
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