Schmid said that inflation has been above the Fed’s 2% objective for over four years.
Federal Reserve Bank of Kansas City President Jeffrey Schmid said on Friday that further interest rate cuts could have longer-lasting effects on inflation.
“I do not think further cuts in interest rates will do much to patch over any cracks in the labor market—stresses that more likely than not arise from structural changes in technology and immigration policy,” Schmid said at the 2025 Energy Conference hosted by the Federal Reserve Banks of Kansas City and Dallas in Denver.
He noted that inflation has been above the Fed’s 2% objective for over four years. “I don’t think we have room to be complacent. History has shown us that persistent inflation can shift the psychology around price-setting, and inflation can become ingrained,” Schmid said.
“Were that to occur, re-anchoring inflation at 2% would be more difficult and costly,” he added.
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