Hot Development: Top-Level Two FED Officials Made Critical Comments on Interest Rates!

As we enter 2025, in a strong economy where inflation is still above the 2% target, Esther Schmid, a member of the Federal Open Market Committee (FOMC) and the President of the Kansas City Fed, made cautious remarks regarding monetary policy adjustments.

Speaking at the Kansas City Economic Club today, Schmid said that interest rates may have approached their long-term equilibrium.

Schmid said, "We are now very close to reaching the dual goals of price stability and full employment." Schmid stated that inflation was gradually moving towards the FED's target, economic growth continued to show momentum, and although the labor market had weakened, it remained healthy.

Schmid added, 'With inflation running close to target and economic growth continuing to strengthen, I believe we are approaching a turning point where the economy requires neither restraint nor support, and policy should be neutral.' Schmid signaled support for maintaining current rates by saying, 'It is likely that interest rates will remain close to long-term levels.'

Schmid, indicating a data-driven approach to future interest rate cuts, said, 'I support gradual adjustments in policy and will only respond if data trends indicate a significant change.' Schmid also expressed optimism about ongoing inflationary pressures and economic growth, while calling for further reduction of the Fed's balance sheet. Schmid reiterated the Fed's long-term goal of holding only US Treasury bonds in its portfolio.

FED member Michelle Bowman also used a cautious tone but focused on the challenges of inflation and policy adjustments. Bowman described the interest rate cut in December as the "final step" in the Fed's policy restructuring, but suggested that it may not have been necessary due to the resilience of the economy and the lack of significant progress in inflation.

Bowman said, “We should be cautious when evaluating adjustments in policy interest rates.” Bowman emphasized the importance of avoiding biased policy actions under the new management, advocating for a moderate and data-driven approach.

Bowman warned that upward risks to inflation persist and noted that economic recovery has slowed in some regions. 'Inflation levels continue to remain high and the coming months will provide a clearer understanding of the new administration's policies and their impact on inflationary pressures,' he said.