Kansas City Fed's Schmid says inflation is too hot, rates too accommodative on eve of Jackson Hole

Key Points:

• Kansas City Federal Reserve President Jeff Schmid stated that current interest rates remain too accommodative amid persistent inflation above the Fed's 2% target, emphasizing the need for further action to prevent more severe rate hikes later.
• Schmid highlighted demand-driven inflation factors, including increased demand for commodities and technology from businesses of all sizes, as key contributors to inflation beyond supply shocks and geopolitical issues like the Middle East conflict.
• He expressed cautious support for Fed Chairman Kevin Warsh's efforts to improve communication and data analysis through newly formed task forces, which aim to enhance policy decisions and transparency over time.
• Schmid sees potential benefits in reducing Federal Open Market Committee (FOMC) meetings from eight to six annually, allowing more time for data collection and trend analysis to inform smarter policy decisions.
• While open to evolving the Fed's approach, Schmid remains confident in the Personal Consumption Expenditures (PCE) index as the best current inflation gauge but is interested in leveraging technology for more real-time economic data.