Fed's Schmid Warns Against Complacency on Inflation

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Kansas City Federal Reserve President Jeff Schmid warned on Tuesday that the central bank should not be complacent about the risks to inflation expectations, even as most measures of medium- and long-term inflation expectations have been stable. Schmid said he is more focused on the risks to inflation at this time as the central bank must weigh threats to its two goals of stable inflation and maximum employment.

Why it matters

Schmid's comments highlight the growing concerns among Federal Reserve policymakers about the potential for higher oil prices to push up inflation and undermine the central bank's ability to achieve its inflation target. The Fed is walking a fine line as it tries to support the labor market while also keeping a lid on inflation.

The details

Schmid said he does not think the Fed can be complacent about the risks to inflation expectations, noting that inflation was running near 3% even before the Iran war set off a surge in oil prices. He added that progress toward the Fed's 2% inflation goal had stalled. Schmid did not specify what policy actions he had in mind, though last year he dissented twice against the Fed's decision to cut rates. Many of Schmid's colleagues have also expressed concerns about the potential for higher oil prices to unmoor inflation expectations, but they have also said it is fine to wait and see what happens for now.

• Schmid made the remarks on Tuesday, March 31, 2026.

What they’re saying

What’s next

The Federal Reserve will need to closely monitor inflation and inflation expectations in the coming months to determine if any policy actions are necessary to keep price pressures in check.