By Michael S. Derby<\/p>\n
(Reuters) -Federal Reserve Bank of Kansas City President Jeffrey Schmid said on Thursday that last week\u2019s central bank interest-rate cut was needed to help ensure that the job market remains in a good place.<\/p>\n
While the economy is currently in a pretty good spot relative to the Fed\u2019s inflation and job goals, \u201csome recent data suggests a growing risk that the labor market may weaken more substantially or abruptly than I had been anticipating,\u201d Schmid said in the text of a speech prepared for a gathering of the Mid-Sized Bank Coalition of America in Dallas.<\/p>\n
\u201cAs such, 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,\u201d Schmid said.<\/p>\n
The official\u2019s comments were his first public remarks since last week\u2019s interest-rate-setting Federal Open Market Committee meeting. At that gathering Schmid joined with his colleagues and voted in favor of a quarter-percentage-point interest-rate cut, leaving the central bank\u2019s rate target range at between 4% and 4.25%.<\/p>\n
Fed officials are still worried that inflation pressures remain too high relative to their 2% target and that those pressures could get worse due to President Donald Trump\u2019s trade tariff surge. But they\u2019ve grown more worried about the state of the labor market and are using monetary policy to help offset risks there.<\/p>\n
Speaking on Tuesday, Fed Chairman Jerome Powell said that the Fed is now facing an \u201cunusual\u201d situation with risks to both its job and inflation mandates that is tilting its focus toward the former goal. For most of this year, \u201cour policy rate has been tight because inflation has been above our target, but the labor market was very solid,\u201d but going into the summer \u201cthe labor market has softened,\u201d and cutting rates is aimed at preventing this situation from getting worse.<\/p>\n
The Fed also penciled in additional rate cuts at the meeting and expects to close out the year with its interest rate target around 3.50% to 3.75%.<\/p>\n
The meeting also saw newly installed Fed Governor Stephen Miran vote in favor of a half-percentage-point increase. Fed officials are actively debating how quickly they need to cut rates, with some arguing for a go-slow approach amid ongoing inflation worries, while others believe the Fed needs to act aggressively to ensure that the labor market does not lose too much ground.<\/p>\n
In his remarks, Schmid said, \u201cMy view is that inflation remains too high while the labor market, though cooling, still remains largely in balance.\u201d Moving monetary policy to an \u201conly slightly restrictive\u201d stance is the right place to be while the Fed manages risks to its two mandates.<\/p>\n
Schmid did not say where he thinks Fed interest rate policy is heading, noting, \u201cI will continue to take a data-dependent approach to any further adjustments in the policy rate.\u201d<\/p>\n
Schmid also said in his remarks that financial supervision work is important for the central bank and helps inform its broader mission.<\/p>\n
\u201cEach of our mission areas \u2014 supervision, monetary policy, liquidity provisioning, and the robustness of the payments system \u2014 depends on the others to function effectively and cohesively,\u201d the official said.<\/p>\n
(Reporting by Michael S. Derby; Editing by Mark Porter)<\/p>\n","protected":false},"excerpt":{"rendered":"By Michael S. Derby (Reuters) -Federal Reserve Bank of Kansas City President Jeffrey Schmid said on Thursday that…\n","protected":false},"author":2,"featured_media":37211,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[114,85,46,190],"class_list":["post-37210","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-business","tag-il","tag-israel","tag-markets"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/37210","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=37210"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/37210\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/37211"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=37210"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=37210"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=37210"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}