A top policymaker at the US Federal Reserve has reaffirmed that interest rates are well positioned to steer inflation downward, defying renewed political calls for aggressive cuts.
Speaking at a financial conference in Kansas City, Federal Reserve Bank President Jeff Schmid said the current monetary stance remains “slightly restrictive,” a balance he described as “appropriate for the economy’s current state.”
Schmid, who sits on the Fed’s rate-setting committee, acknowledged voting in favor of a modest rate cut last month—a decision he framed as a “risk-management measure” amid signs of a softening labor market. Still, he maintained that the overall direction of policy should prioritize price stability.
“The Federal Reserve must preserve its credibility on inflation,” Schmid emphasized, noting that maintaining that trust is key to preventing longer-term economic distortions.
His remarks underscored the Fed’s ongoing balancing act between supporting employment and containing inflation, a dynamic made more complex by external political pressures. Former President Donald Trump has been a frequent critic of the central bank’s pace of rate adjustments, urging faster cuts to spur growth ahead of the election cycle.
Despite those calls, Schmid and other Fed officials appear intent on maintaining an independent course. Inflation, though easing from its 2022 peak, remains above the bank’s 2 percent target, while recent data point to a gradual cooling of the labor market—a combination that has kept policymakers cautious.
Markets, meanwhile, continue to anticipate a quarter-point reduction at the Fed’s upcoming meeting, which would bring the benchmark lending rate into the 3.75–4.00 percent range.
Analysts say Schmid’s comments signal that, while the central bank remains open to adjustments if the economy weakens further, it is equally determined not to declare victory over inflation too soon.
In essence, the Fed appears committed to staying its course—charting a middle path between political demands and economic reality.
