MNI: Inflation Remains Too High, Jobs Balanced - Fed's Schmid

The Federal Reserve's rate cut last week was a reasonable move in balancing risks to its dual mandate, but inflation remains farther from goal than employment, Federal Reserve Bank of Kansas City President Jeff Schmid said Thursday. 

"I viewed the 25-basis point cut in the policy rate last week as a reasonable risk-management strategy as the Fed balances its inflation objective with some heightened concern over the health of the labor market," he said in remarks prepared for the Mid-Sized Bank Coalition of America in Dallas, Texas. 

"My view is that inflation remains too high while the labor market, though cooling, still remains largely in balance."

The cooling in the labor market so far is consistent with returning inflation to 2%, Schmid said, but he acknowledged that recent data showed "a growing risk that the labor market may weaken more substantially or abruptly than I had been anticipating." 

"Against this backdrop, I will continue to take a data-dependent approach to any further adjustments in the policy rate. I will be watching the incoming inflation and labor market data closely as I continue to assess the balance of risks to the Fed’s dual mandate," he said. 

Monetary policy is "slightly restrictive, which I think is the right place to be." 

September's FOMC projections showed six policymakers saw no more cuts this year, while nine penciled in two more cuts and two wrote in one more cut. (See: MNI INTERVIEW: Fed Right To Remain Cautious On Rate Cuts-Kohn)