FED: Harker, Schmid Don't Sound In Any Hurry To Adjust Policy

Two FOMC members, Philadelphia's Harker (non-2025 voter, leans dove) and Kansas City's Schmid (2025 voter, hawk) sounded like they were not in a hurry to adjust monetary policy.

In his last speech (link) as Philadelphia Fed president (he retires at the end of June), Harker interestingly noted that not just the magnitude of future moves was in question, but also the direction: "It is far from certain, but it is entirely possible that the Committee will be facing both upward pressures on prices and rising unemployment. Once there is a trade-off between our mandates, the direction of travel is in question. That is quite different from, say, the last tightening cycle.... Whenever price stability and maximum employment are at odds, a mistake could send policy the wrong way. To go the right way, we need to know more about the magnitude and persistence of the effects on inflation and employment. Which, effectively, means we have to wait and see."

• He sounded concerned about not just future potential tariff-generated inflation, but also incoming data: "disinflation has proceeded only slowly, and that in itself has been reason enough to hold steady".

KC's Schmid's speech (link) was typically cautious about the inflation outlook, suggesting he's happy for rates to stay on hold for the foreseeable future, saying "Policy will need to remain nimble as the FOMC balances the two sides of its mandate. While the tariffs are likely to push up prices, the extent of the increase is not certain, and likely will not be fully apparent for some time. Likewise, the extent of the drag on growth and employment is also unclear..as the FOMC balances its mandate, I intend to remain focused on the importance of maintaining credibility on inflation". 

• He noted on the tariff-inflation debate "while theory might suggest that monetary policy should look through a one-time increase in prices, I would be uncomfortable staking the Fed’s reputation and credibility on theory. "