FED: Schmid Sticks To Firmly Hawkish Stance

Kansas City’s Schmid (’25 voter, hawk) offers a firmly hawkish stance around the balance of risks facing the outlook, focusing on inflation upside amidst greater balance in the Fed’s dual mandate. He was already thought to have had a good chance of being one of four dots at the March SEP who pencilled in no cuts for 2025 or if not in that group then very likely to have been one of four who looked for just one cut. 

The below are taken from his full remarks (found here): 

• "Given the recent experience with high inflation, I am concerned that any further jump in prices could further push up inflation expectations,"
• "The recent tariff announcements have elevated economic uncertainty and have coincided with a decline in consumer sentiment and increases in near-term inflation expectations."
• “When contemplating this balance [of inflation risks against growth and employment concerns], I intend to keep my eye squarely focused on the outlook for inflation.”
• "While in theory, tariffs may have only temporary effects on inflation (although persistent effects on the level of prices) I would be hesitant to take too much solace from theory in this environment."
• "Now, with renewed price pressures likely, I am not willing to take any chances when it comes to maintaining the Fed’s credibility on inflation."