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Fed’s Schmid Opposes Rate Cut Amid Inflation Concerns

Jeff Schmid, President of the Federal Reserve Bank of Kansas City, has expressed his dissent regarding the recent decision by the U.S. central bank to lower interest rates. Schmid voted against the 25-basis point reduction, citing concerns that such a move would not effectively address the ongoing challenges in the labor market. He emphasized that these challenges are likely driven by structural transformations influenced by technology and demographic shifts.

In his statement, Schmid warned that while a rate cut may seem beneficial in the short term, it could potentially undermine the Federal Reserve’s long-term commitment to maintaining a 2% inflation target. He stated, “I do not think a 25-basis point reduction in the policy rate will do much to address stresses in the labor market that more likely than not arise from structural changes in technology and demographics.”

As inflationary pressures continue to rise, Schmid’s concerns highlight the delicate balance the Federal Reserve must strike between fostering economic growth and controlling inflation. His perspective adds to the ongoing debate among policymakers about the best course of action in response to current economic conditions.

This report is based on insights from Bloomberg’s Michael McKee.

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Source: Original