Kansas City Fed’s Schmid Says Inflation Near 3% Poses Bigger Risk Than Jobs

Kansas City Federal Reserve President Jeffrey Schmid said the U.S. labor market remains “solid” and that supply and demand for workers appear balanced, even with continued immigration. Speaking in a televised interview ahead of next week’s Jackson Hole symposium, he cautioned that the “last mile” of disinflation is proving hard to achieve. Schmid estimated headline inflation is “closer to 3% than 2%,” underscoring that the central bank still has “work to do” to return price growth to target. Policymakers will watch August and September data closely before the next Federal Open Market Committee decision, he said, adding that cutting short-term rates too soon could unmoor inflation expectations. While acknowledging some economic cooling earlier this year, Schmid said inflation risks now outweigh risks to employment. He also suggested the mortgage-application process could be simplified to reduce paperwork and expressed confidence that Governor Lisa Cook will address recently reported mortgage-fraud allegations “as she needs to.”