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KC Fed President Jeff Schmid Comments on Rising Inflation Expectations

Kansas City Fed president Jeff Schmid said the Fed need to stay on guard as inflation rates are expected to rise. Photo credit: Federal Reserve Bank of Kansas City.

Posted February 27, 2025

Kansas City Fed president Jeff Schmid said that Thursday now is not the time for the Fed to lower its guard against a rise in consumer inflation expectations.

While giving remarks at the USDA Annual Agricultural Outlook Forum on Thursday, Schmid proclaimed the Federal Reserve should tread cautiously as consumer price expectations continue to increase.

“The last two months have seen a sharp upward movement in some measures of expected inflation,” Schmid said at the agriculture conference. “Certainly, survey measures of inflation expectations are imperfect and subject to noise, but with inflation just recently at a 40-year high, now is not the time to let down our guard,”

His comment comes following a new survey from the Conference Board which recorded the largest monthly decline in consumer confidence since August 2021. More than half, 51.7%, of consumers surveyed expect higher interest rates over the next 12 months.

“It could be argued that some of the factors driving up inflation expectations are likely one-off transitory developments, but again given recent experience, I am not willing to take any chances when it comes to maintaining the Fed’s credibility on inflation,” Schmid said.

The Fed is expected to hold interest rates steady at their meeting next month as they await the effects of the Trump administration’s policies on tariffs and immigration, Reuters reported Thursday.