Kansas City Federal Reserve President Jeff Schmid said Friday that he preferred to leave interest rates unchanged at this week's monetary policy meeting because he believes the risk of higher inflation outweighs any concerns about the labor market, which he considers to be in relative equilibrium.
In a statement, Schmid explained that he does not believe a 25-basis-point rate cut would significantly address the pressures in the labor market, which he sees as primarily driven by structural changes in technology and demographics. He added that such a cut could be detrimental to the long-term trajectory of inflation if the market begins to question the Fed's commitment to its 2 percent inflation target.
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