Fed’s Schmid Says More Cuts Could Drive Inflation Pressures

Federal Reserve Bank of Kansas City President Jeff Schmid said additional interest-rate cuts could do more to ingrain higher inflation than shore up the labor market.

“I do not think further cuts in interest rates will do much to patch over any cracks in the labor market — stresses that more likely than not arise from structural changes in technology and immigration policy,” Schmid said Friday in Denver. “However, cuts could have longer-lasting effects on inflation as our commitment to our 2% objective increasingly comes into question.”