Fed’s Schmid says inflation still nearly a point above target

Investing.com -- Federal Reserve Bank of Kansas City President Jeff Schmid said Tuesday that inflation remains too high, with the latest data showing it is nearly a percentage point above the central bank's 2% target.

Speaking at an event in Denver, Colorado, Schmid noted that inflation has exceeded the Fed's objective for nearly five years. He emphasized that there is no room for complacency on the issue.

The Fed is expected to hold interest rates steady at its meeting this month, following a similar decision at its January meeting. Most policymakers have indicated they prefer to maintain current rates while awaiting further evidence that inflation is moving toward the target.

Schmid said inflationary pressures are visible in both tariff-impacted goods and services. Data released last month showed underlying inflation in the Fed's preferred measure rose 3% in the 12 months through December, indicating no progress toward the 2% target throughout 2025.

The Kansas City Fed president added that while he is optimistic about the potential for artificial intelligence and other emerging technologies to eventually support non-inflationary growth, that point has not yet been reached.

Schmid also referenced recent data suggesting the labor market is in balance. He noted that high demand for health-care workers, expected to persist as the population ages, is putting pressure on profit margins in the sector and could contribute to additional inflation. Health care accounted for nearly all new job creation in 2025.

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