Fed's Schmid warns that rate cuts could prolong inflation
Federal Reserve's Christopher Schmid said that current interest rate levels are not slowing economic growth, and maintaining inflation around 3% is enough to justify tight policy. Productivity gains might allow for faster economic growth without pushing up prices—but "we're not there yet." Strong demand still exceeds supply, and temporary price shocks require us to focus on the Fed's 2% inflation target. There is currently an opportunity to reduce bank reserves and shrink the Fed's balance sheet.
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