Fed's Schmid hints at reluctance to cut rates again, rates 'close' to neutral levels

As the Federal Reserve enters a new year with a strong economy and inflation still above its 2% target, Kansas Fed President Schmid hinted Thursday that he would be reluctant to cut rates again. Speaking at the Economic Club of Kansas City, Schmid said, “We are now very close to achieving our twin goals of price stability and full employment,” and “with inflation approaching its target and economic growth showing continued momentum, I believe we are nearing the point where the economy needs neither restriction nor support at a tipping point where policy should be neutral.” In the current environment, “interest rates are probably very close to their long-term levels,” Schmid said. He said, “I favor a gradual adjustment of policy, reacting only if the tone of the data continues to change.” He added, “The strength of the economy allows us to be patient.”