Fed Official Warns US Inflation Is Moving in the Wrong Direction

Kansas City Federal Reserve President Jeff Schmid declared that inflation in the United States remains at elevated levels. The official emphasized that the central bank has the responsibility and the necessary tools to control price growth.

Schmid criticized interpretations that current inflation stems solely from supply shocks. He argued that the imbalance between supply and demand is the central factor and that the Fed maintains direct influence over this scenario through monetary policy.

The speech reflects concern regarding the price trajectory, which the official described as uncomfortably above the official 2% target. He also refuted the idea that sectors such as artificial intelligence would be immune to interest rate adjustments promoted by the monetary authority.

The financial market reacted to the remarks and recent inflation data. Bets in futures contracts already incorporate a 0.25 percentage point increase in interest rates during the December meeting of the Federal Open Market Committee.

The Fed chose to keep interest rates stable at the last meeting following a hike in September. Now, the expectation of further adjustments is gaining momentum among investors in light of the more cautious stance taken by American authorities.