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Federal Reserve Bank of Kansas City President Jeffrey Schmid signaled he\u2019s not ready to support a reduction in interest rates with inflation above target and the labor market still healthy despite some cooling.<\/p>\n
In a speech to the Kansas Bankers Association, Schmid said the recent decline in inflation has been \u201cencouraging\u201d and further reports of low price pressures would add to his confidence that inflation was on a path to the central bank\u2019s 2% target, and to therefore lower interest rates.<\/p>\n
\u201cWe are close, but we are still not quite there,\u201d Schmid said. He didn\u2019t give a view on when the Fed should cut interest rates: \u201cThe path of policy will be determined by the data and the strength of the economy.\u201d<\/p>\n
Fed policymakers have pushed back on calls for aggressive actions following a weaker-than-expected\u00a0jobs report<\/a>\u00a0in July, when hiring slowed markedly and the unemployment rate rose to the highest level in nearly three years. Markets are putting greater than even odds on a half-point cut in September.<\/p>\n \u201cOverall, the labor market still appears healthy,\u201d Schmid said. \u201cLast week\u2019s employment report for July led many to question this resilience. But it is important to note that many other indicators point to continued strength.\u201d<\/p>\n Business contacts in the Kansas City Fed region have \u201ca general tone of optimism and resilience,\u201d he added.<\/p>\n Last week policymakers kept interest rates unchanged at a more than two-decade high, yet signaled they were closer to lowering borrowing costs. Chair Jerome Powell said a rate cut could be appropriate as soon as the central bank\u2019s September meeting.<\/p>\n Schmid, who is among the more hawkish Fed officials, said a surge of inflation to a multi-decade high two years ago calls for caution in evaluating progress and \u201cwe should be looking for the worst in the data rather than the best.\u201d<\/p>\n Schmid was named to lead the Kansas City Fed last August. The former president and chief executive officer of the Southwestern Graduate School of Banking Foundation at Southern Methodist University\u2019s Cox School of Business was a longtime banker and bank regulator.<\/p>\n<\/div>\nRecommended Newsletter: <\/strong>CEO Daily provides key context for the news leaders need to know from across the world of business. Every weekday morning, more than 125,000 readers trust CEO Daily for insights about\u2013and from inside\u2013the C-suite. Subscribe Now<\/a>.<\/div>\n<\/div>\n