Fed's Schmieding Says Policy Remains Accommodative, Inflation Above Target

On August 27, Fed's Schmieding stated that the current interest rate levels have not suppressed the U.S. economy, and inflation remains above the Fed's 2% target. Schmieding pointed out that short-term rates may be too accommodative, indicating that there is still work to be done. At the July meeting, policymakers decided to keep rates in the range of 3.5% to 3.75%, with three officials voting against the decision in support of a rate hike. Minutes from the meeting showed that several officials, including some non-voting members, favored a rate increase, believing that monetary policy must be tightened if inflation does not decline. Schmieding also rebutted the notion that the Fed's credibility has been damaged, mentioning that Fed Chair Waller's press conference in July triggered a strong reaction in the bond market, leading to doubts about the Fed's credibility.

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