Fed’s Schmid Cautious on September Rate Cut, Highlights Key Labor Data

Kansas City Fed President Jeffrey Schmid signaled caution about a potential September rate cut, emphasizing the importance of upcoming labor market data. The August jobs report, due September 5, will be "very consequential" in shaping the central bank's next move. Schmid's remarks at the Jackson Hole Economic Symposium underscored a balancing act between persistent inflation and emerging labor market softness.

Monetary policy remains "modestly restrictive" as inflation lingers above the 2% target. Recent indicators suggest price pressures may be reaccelerating, even as hiring shows signs of cooling. Markets have priced in rate cuts for September following July's softer employment figures, but Schmid's comments suggest the Fed remains more concerned about stubborn inflation than a rapid labor market deterioration.