Fed’s Schmid Says Policy in Right Place to Bring Down Inflation

Core Viewpoint - The Federal Reserve may not need to lower interest rates again soon, as inflation remains high and the labor market is still balanced despite some cooling [1][2]. Interest Rate Decisions - The recent 25-basis point cut in the policy rate was viewed as a reasonable risk-management strategy, with the current policy stance considered only "slightly restrictive" [2]. - Fed officials are divided on the number of additional rate cuts needed this year, with projections indicating a median expectation of two more quarter-point cuts, while many anticipate one or no cuts [3]. Labor Market and Inflation - A cooling labor market could help reduce price pressures, but recent data suggests an increased risk of a more sustained or abrupt economic slowdown [3]. - The Kansas City Fed chief emphasizes a data-dependent approach for future policy adjustments, closely monitoring inflation and labor market data [4]. Central Bank Independence - The importance of the Federal Reserve's independence from political interests is highlighted, as it is crucial for effective monetary policy and sound supervision and regulation [5]. - Independent supervisors can focus on long-term financial stability and respond agilely to instability, fostering public trust in the banking system [5].