Federal Reserve official Schmid said current interest-rate levels are not restraining the U.S. economy even though inflation remains above the Fed's 2% target. He said short-end rates may still be on the loose side and added that policymakers still have work to do. His remarks point to a view inside the Fed that policy may need to tighten further if price pressures do not ease.
At the Fed's July meeting, policymakers voted to keep rates unchanged at 3.5% to 3.75%. Three officials dissented in favor of a rate hike. Minutes from that meeting showed that several officials, including some non-voting participants, supported raising rates, while many others said monetary policy would need to be tightened if inflation failed to decline.
Schmid also pushed back on claims that the Federal Reserve's credibility has been damaged. Those concerns followed a poorly received July press conference by Fed Chair Warsh, which triggered a strong reaction in the bond market. The remarks were reported by BlockBeats, citing Jin10.
Federal Reserve official Schmid said on Aug. 27 that current U.S. interest-rate levels are not restraining the economy even as inflation remains above the central bank's 2% target.
Schmid says short-end rates may still be loose
「To me, I think the short end of the rate curve may be somewhat loose. So we still have work to do,」 Schmid said.
He also said, 「Some of my colleagues dissented at the last meeting, so I may be in that camp as well.」
July meeting held rates steady, with support for a hike
At the July meeting, policymakers voted to keep rates in a 3.5% to 3.75% range. Three officials dissented and backed a rate increase.
The meeting minutes showed that several officials, including some non-voting officials, supported a hike. Many others also said monetary policy would need to be tightened if inflation did not come down.
He rejects claims of damaged Fed credibility
Schmid also rejected arguments that the Federal Reserve's credibility has been harmed. Earlier, a poorly received July press conference by Fed Chair Warsh prompted a sharp reaction in the bond market, leading to criticism that the episode damaged the Fed's standing.
The report was published by BlockBeats and cited Jin10 as the source.
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