Three Federal Reserve officials warned on Thursday that U.S. inflation remains too high, as central bankers gathered in Jackson Hole, Wyoming for the Kansas City Fed's annual economic symposium. Their comments keep the possibility of further rate increases in focus ahead of Chair Kevin Warsh's Friday speech.
Kansas City Fed President Jeffrey Schmid, Cleveland Fed President Beth Hammack and Chicago Fed President Austan Goolsbee all said Thursday that price pressures remain too high for comfort, even as the Fed's policy rate sits in the 3.50%-3.75% range. Their remarks, delivered on the sidelines of the Jackson Hole symposium, keep the door open to further tightening ahead of Chair Kevin Warsh's Friday speech.
Schmid and Hammack say the current rate isn't restrictive enough
Kansas City Fed President Jeffrey Schmid said inflation remains stubborn and sticky, and that the federal funds rate, left in the 3.50%-3.75% range at the Fed's July 28-29 meeting, does not appear restrictive. Asked about a possible rate hike at the Fed's September 15-16 meeting, he said he needs more information on what is driving growth and inflation before deciding.
Cleveland Fed President Beth Hammack, one of three officials who dissented at last month's meeting in favor of a rate increase, said inflation has stayed above the Fed's target for more than five years. She said she is hearing more from contacts worried about price pressures, and fears that the longer the trend continues, the more the public's expectations could shift toward accepting persistently higher prices.
Goolsbee flags energy costs and tariffs
Chicago Fed President Austan Goolsbee said his biggest near-term fear is that inflation is not under control. According to Reuters, on the Rapid Response podcast he said: "Everybody should be on edge." He pointed to rising energy costs tied to the war in Iran and shifting U.S. tariff policy as additional pressure on households.
Still, he said the recent three-month inflation trend did not look severe. He added that the policy rate could be lowered over time if data showed inflation heading back toward 2%.
Attention turns to Warsh's Friday speech
The comments followed data showing the Personal Consumption Expenditures Price Index rose 3.7% over the 12 months through July, matching June's pace but down from 4.1% in May. Futures markets currently lean against a rate increase at the Fed's next meeting but price in stronger odds of tightening before the end of 2026.
Warsh, delivering his first Jackson Hole address since taking over as chair, is scheduled to speak Friday at the 49th annual symposium, themed "Financial Innovation: Implications for Payments and Policy." Markets are watching for clues on the rate path, though Warsh has so far declined to give firm forward guidance.
Sources: Reuters, Crypto Briefing
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