Workflow
Fed’s Schmid on Inflation, Policy, Fed Independence
Bloomberg Television·2025-08-21 11:36

Monetary Policy & Economic Outlook - The market is focused on the implications of the September 17th events and recent economic data [1] - The speaker interprets recent labor market trends as showing renewed business optimism after initial uncertainty [2][3] - There's a belief that inflation is trending closer to 3% rather than 2%, with the Open Market Committee viewing inflation as a significant risk [4] - Companies have adapted to supply chain disruptions, potentially mitigating the impact of tariffs and other shocks [6][7] - As inflation approaches the dual mandate target, policy rate decisions become more complex [9][10] - The current policy rate is considered modestly restrictive, but the speaker is seeking evidence of economic inhibition [11] - The goal is to achieve a soft landing to 2% inflation without causing economic disruption [12] Federal Reserve Communication & Framework - The Federal Reserve is reviewing its framework, incorporating lessons from the 2020 pandemic cycle, with a focus on improving transmission of its policies [14][15] - A consistent framework is deemed important for collaboration and consensus among the 19 members, while maintaining agility [17][18] - There are ongoing debates about the appropriate level of Federal Reserve communication, balancing transparency with avoiding market speculation [19][20] - The Federal Reserve aims to improve public understanding of its actions and the dual mandate [21] Federal Reserve Independence & Public Perception - The Federal Reserve maintains its independence from political influence, focusing on its economic mandate [22] - The Federal Reserve's credibility is tied to fulfilling its monetary policy responsibilities [25] - Conversations with people in the district provide real-time feedback that informs policy discussions [27] - The Federal Reserve is focused on ensuring safe and sound banks, payment systems, and valuable research [28] - The Federal Reserve differentiates between the understanding of monetary policy by business/finance professionals and the general public, emphasizing the importance of communicating the dual mandate [29][30]