The Federal Reserve (FED) Schmidt supports a wait-and-see attitude, follow price data

Gate News bot message, according to Bloomberg, Kansas City Federal Reserve President Jeff Smiedt said that The Federal Reserve (FED) should wait to observe the impact of tariffs and other policies on the economy before adjusting Intrerest Rate.

Schmidt’s remarks indicate that he is not in a hurry to lower borrowing costs, which is consistent with what The Federal Reserve (FED) Chairman Jerome Powell told lawmakers earlier on Tuesday.

Schmidt said in a speech at an event in Omaha, Nebraska on Tuesday, “Given all this uncertainty, the current monetary policy stance, the so-called ‘wait-and-see’ approach, is appropriate. The resilience of the economy gives us time to observe how prices and the economy develop.”

At the beginning of this month, policymakers held a meeting and kept the Intrerest Rate unchanged for the fourth consecutive time. Officials of The Federal Reserve (FED) lowered the Intrerest Rate by a full percentage point at the end of 2024, and have been in a wait-and-see mode so far this year, waiting for the upcoming data to observe how changes in trade, immigration, and fiscal policy will affect inflation and the labor market.

Schmidt is one of the more cautious policy makers at The Federal Reserve (FED) when it comes to inflation issues. He appreciates the recent easing of price pressures, but points out that the rapid rise in inflation that people experienced not long ago may affect how tariffs affect price expectations.

Schmidt said, ‘Of course, due to the lingering inflation in people’s minds over the past few years, I will closely monitor monthly price data for signs of widespread price increases, which may further challenge the already fragile price-setting psychology.’

He emphasized that the policy of The Federal Reserve (FED) should be forward-looking, and indicated that the price stability target and full employment target of The Federal Reserve (FED) are likely to conflict. But he added that it is not yet clear ‘when and to what extent the conflict will occur’.