Fed’s Schmid says tighter policy is needed to bring inflation back to 2%

Federal Reserve official Schmid said tighter monetary policy is needed to return inflation to the central bank’s 2% target, according to Odaily, citing Jin10. He said inflation remains too high and concerning, and added that the Fed’s current policy stance is not restrictive. Schmid also said the broader economy is performing well and growth remains resilient. While he welcomed recent inflation data, he said it is still too early to say whether inflation is slowing. On the labor market, Schmid said conditions appear to be broadly in balance. He also said the Federal Reserve should not ignore inflation even when it is driven by supply shocks. In his view, the Personal Consumption Expenditures price index is the best way to measure inflation. He added that investment tied to artificial intelligence is pushing inflation higher and said the Fed should not overlook that factor. The remarks focus on inflation risks, the policy stance, labor market conditions, and the indicators Schmid sees as most useful in tracking price pressure.