Kansas City Fed President Schmid: remains to be seen how much further rates fall

In a speech titled “Longer-term Considerations for Growth and Monetary Policy”, Kansas City Federal Reserve President Jeff Schmid, who will also be an FOMC voter in 2025, stated: “:et’s look back at the FOMC’s decision earlier this month. During its November meeting, the FOMC cut its policy rate by a percentage point, following a 1/2 point cut in September. These cuts came after a year of holding rates flat and, before that, a rapid increase in rates as the Fed moved to address the spike in inflation that followed the pandemic. The decision to lower rates is an acknowledgement of the Committee’s growing confidence that inflation is on a path to reach the Fed’s 2% objective-a confidence based in part on signs that both labor and product markets have come into better balance in recent months. While now is the time to begin dialing back the restrictiveness of monetary policy, it remains to be seen how much further interest rates will decline or where they might eventually settle.”