Kansas City Fed President Jeff Schmid said Friday he would prefer to keep interest rates steady and not cut them until there is “compelling” evidence that inflation is falling. He cited the resilience of the U.S. economy and inflation still above the Fed’s 2% target as reasons for his cautious stance. Inflation, he said, has unexpectedly risen since the start of the year and is running at about 4% since the first quarter. “Rather than preemptively adjusting the policy rate, I would prefer to be patient and wait for clear and compelling evidence that inflation is on track to reach our 2% target before adjusting monetary policy,” Schmid said during a speech at a conference in Kansas. On inflation, Schmid said he is watching whether labor market strength is driving up service prices through higher wages and whether more people are joining the labor force. He noted that demand for labor remains high, as evidenced by active hiring and increased wage growth.
