Federal Reserve Bank of Kansas City President Jeff Schmid said the U.S. central bank still has work to do to bring inflation under control, warning that the Fed’s credibility is at stake.
Schmid said inflation remains frustrating and must be addressed, while noting that the labor force remains in a good position.
He also highlighted the growing impact of artificial intelligence on inflation, saying AI has become one of the largest drivers of price pressures. Strong AI-related investment and demand could continue to create pressure in parts of the economy.
Schmid added that the Fed may still need to adjust short-term interest rates, even as longer-term Treasury yields have moved higher.
His comments reinforce a hawkish policy outlook, suggesting the Fed may remain cautious about easing monetary policy while inflation stays above its 2% target.
