Fed’s Schmid Warns ‘Inflation Remains Too Hot’ as Rate Cut Odds Stumble

FomoAnxiety · 2026-03-03T16:17:04+00:00

Kansas City Fed President Jeffrey Schmid emphasizes that inflation remains above target at 3%, advocating for steady interest rates amid concerns over rising goods and services prices, and diminished odds for rate cuts this year.

FomoAnxiety

2026-03-03 16:17:04

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Kansas City Federal Reserve President Jeffrey Schmid continues to believe that “inflation remains too hot” and voiced his support for keeping rates steady.

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“Turning to the other side of the Fed’s mandate, inflation remains too hot,” Schmid said in prepared remarks for a Metro Denver Executive Club event. “The recent data suggest that inflation remains closer to 3 percent than the Fed’s 2 percent inflation objective.” The most recent core personal consumption expenditures (PCE) update, which is the Fed’s preferred inflation gauge, showed prices rising by 3% in December.

Rate Cut Odds Fall on Inflation Fears

Schmid added that higher goods prices, partly due to tariffs, have contributed to inflation. At the same time, rising services costs have also led to elevated prices. “I don’t think we have room to be complacent,” he said.

The odds of rate cuts at the Federal Open Market Committee (FOMC) meetings this year have fallen in recent days amid concerns of higher inflation from disruptions to the Strait of Hormuz. The odds of a 25-bps reduction at the March 18 and April 29 meetings are 4.5% and 17.7%, respectively. The same odds sit at 36.9% for the June 17 meeting, down from 42.8% a week ago.

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