Fed’s Schmid Says Policy Restrictive, Sees No Rush to Cut Rates

Federal Reserve policymaker Schmid said the U.S. central bank’s current stance is “modestly restrictive and appropriate,” adding that officials will wait for August and September inflation readings before considering any change to interest rates. Schmid cautioned that the “last mile of inflation is pretty hard,” estimating price growth is likely to remain nearer 3% than the Fed’s 2% goal in the near term. Cutting rates prematurely, she warned, could entrench higher inflation expectations, and the committee therefore is “not in a hurry” to ease policy. The official described the labour market as solid, with supply and demand broadly in balance despite immigration trends, and said credit spreads and other market indicators are in good shape. While the economy showed some cooling in the first half of the year, Schmid sees improving sentiment heading into the second half. She also voiced confidence in Governor Lisa Cook’s handling of regulatory matters and suggested that mortgage-application processes could be streamlined.