This week, multiple US Fed officials made intensive remarks, discussing the timing of future interest rate cuts by the central bank.
On Tuesday Eastern Time, another "wait-and-see" voice joined the Fed: Kansas City Fed President Jeff Schmid publicly stated that the US Fed has ample time to study the impact of rising tariffs on US prices and economic growth before deciding on further rate cuts.
The Fed's "wait-and-see" stance is appropriate
Since December last year, the Fed has kept the benchmark rate stable in the 4.25%-4.5% range. The timing of the next rate cut has become one of the market's focal points.
On Monday, Fed Governors Bowman and Waller first sided with the "rate-cut camp," suggesting cuts could come as early as July, briefly fueling market speculation about the Fed's easing path. However, by Tuesday, more "wait-and-see" Fed officials also spoke publicly, arguing tariff impacts still need observation—clearly, Schmid was among them.
Schmid said: "The current monetary policy stance of 'wait-and-see' is appropriate."
He noted the US economy currently shows resilience, giving the Fed sufficient time to observe how prices and the economy develop before considering changes to the benchmark rate.
Schmid holds voting power on the Federal Open Market Committee (FOMC) this year. The next FOMC meeting will be held on July 29-30.
Employment and Inflation Goals May Conflict
Recently, US President Trump repeatedly criticized Fed Chairman Powell, urging faster rate cuts. Yet Powell's congressional testimony yesterday showed he remains firmly in the "wait-and-see" camp, needing more study on tariffs' inflation impact.
The Fed's latest dot plot indicates that while most FOMC officials expect two rate cuts by year-end, nearly all emphasized uncertainty in US trade policy and broadly anticipated slower US growth, higher unemployment, and rising inflation in coming months.
Schmid stated current US inflation remains above the Fed's 2% target, "Virtually everyone I speak with expects higher tariffs to push up prices and pressure US economic activity."
He added,Amid tariff uncertainty, the Fed's inflation and employment goals are "likely" to conflict—rising prices alongside higher unemployment would leave the Fed in a dilemma on the rate-cut path.
Schmid said that the current "visibility" regarding when and by how much to cut interest rates is still low, so he advocates maintaining interest rates unchanged until the US economy becomes clearer.