Fed’s Schmid Breaks Ranks: Why He Refused the Rate Cut Amid Economic Surge – What This Means for Your Money!
Ever wonder what keeps the Federal Reserve hitting the pause button on interest rate hikes while inflation stubbornly lingers high? Well, Jeffrey Schmid, the Fed Bank of Kansas City President, just laid it out: the labor market’s holding its ground, the economy’s still chugging along, but those price pressures haven’t quit yet. It’s like walking a tightrope—balancing a steady job market against an inflation beast that’s not ready to be tamed with mere rate cuts. And don’t get me started on the subtle dance of ‘modestly restrictive’ policies that still need to lean in hard against demand without snapping the fragile threads. The USD Index is feeling it, inching up as markets digest the hawkish undertones. Curious how this strategy plays out in the big picture of economic moves and market moods? Dive deeper into the Federal Reserve’s latest stance right here: LEARN MORE.
In a statement published on Friday, Federal Reserve (Fed) Bank of Kansas City President Jeffrey Schmid explained he voted in favor of keeping the policy rate unchanged because “the labor market is largely in balance, the economy shows continued momentum, and inflation remains too high.”
Key quotes
“Labor market largely in balance, any stress likely due to structural change that small Fed rate cuts won’t address.”
“Financial conditions appear easy, nothing to suggest financial conditions are particularly tight.”
“Policy is now only modestly restrictive and still needs to lean against demand and price pressures.”
“Lower rates could hurt if Fed’s commitment to 2% inflation target is called into question.”
Market reaction
These comments received a hawkish score of 7.0 from FXStreet Fed Speechtracker. At the time of press, the US Dollar (USD) Index was up 0.13% on the day at 99.65.
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