TechFlow, Oct 31 — Kansas City Fed President Schmid said he voted against the Fed's decision to cut interest rates this week, citing concerns that economic growth and investment could put upward pressure on inflation. Schmid stated, "In my assessment, the labor market is broadly balanced, the economy shows ongoing momentum, and inflation remains too high." The U.S. Labor Department reported earlier this month that consumer prices rose 3% in the year through September, with inflation running above the Fed’s 2% target for over four consecutive years. Schmid reiterated that businesses in his district remain concerned about ongoing cost increases, and monetary policy should maintain some restraint against demand growth. He added, "I don't believe a 25-basis-point rate cut would do much to alleviate labor market pressures, which are more likely driven by technological and demographic changes. However, if markets question the Fed's commitment to the 2% inflation goal, a rate cut could have more persistent effects on inflation." He also noted that current monetary policy is only modestly restrictive, while financial conditions remain accommodative. This marks Schmid’s first dissent as a Fed official. (Jinshi)
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