Fed's Kansas City chief warns rates may stay high

A senior Federal Reserve official has warned that further monetary tightening may be necessary to combat persistent inflation, signaling that interest rates could remain elevated for an extended period. Kansas City Fed President Jeffrey Schmid made the remarks in multiple public appearances, emphasizing that inflation remains the most pressing risk to the U.S. economy.

Schmid stated that inflation has stalled near 3 percent, remaining above the central bank's 2 percent target for a long time. He argued that the current level of monetary policy may not be restrictive enough and that officials must signal a clear commitment to achieving price stability. He noted that the economy remains resilient, with steady growth and a balanced labor market, which provides room for maintaining a firm stance.

The official suggested that if inflation does not show consistent progress toward the target, further tightening could be appropriate. He also indicated that the Federal Reserve may need to consider utilizing its balance sheet as an additional tool to create more restrictive financial conditions. This stance reinforces a "higher for longer" interest rate outlook, potentially delaying...