Kansas City Federal Reserve President Jeffrey Schmid said on Thursday that there is no urgent need to cut interest rates, with inflation still above the central bank’s 2% target and the labor market still strong.
“I think we’re in a good place right now, and we really need to have some solid data before we change policy at this point,” Schmid, a rate-setting voter this year, said in an interview.
Schmid said that with inflation now “probably closer to 3% than 2%,” the Fed needs to consider how cutting rates now could affect public expectations.
“That last part is very difficult,” he said of the Fed’s efforts to return inflation to its 2% target after years above that level.
Schmid was speaking before the Fed’s annual research conference hosted by his regional bank on Thursday night, as policymakers debate whether to cut rates at the Sept. 16-17 policy meeting.
Fed Chairman Jerome Powell is expected to deliver remarks Friday at the symposium.
At its July meeting, the Fed left interest rates unchanged, despite two governors dissenting in favor of a rate cut. Public pressure to lower borrowing costs has also come from President Donald Trump.
Schmid said that despite recent weak jobs data, he has seen optimism growing among his business contacts.
He added that the current benchmark interest rate, set between 4.25% and 4.5%, has done little to dampen economic growth so far.
