Kansas City Fed President Jeffrey Schmid said in a speech today that with the economy still showing momentum, business optimism rising, and inflation remaining above Fed’s 2% goal, it is appropriate to keep monetary policy “modestly restrictive” for now.

Schmid noted that while higher tariffs appear to have had only a limited effect on inflation so far, he sees this as a reason to maintain the current policy stance rather than an opportunity to ease.

He stressed that his view is not a “wait-and-see” approach but rather a data-backed assessment of the need to stay restrictive. In conversations with business contacts, Schmid said growth remains solid and inflation “too high,” reinforcing his position that policy should not be loosened yet.

Full speech of Fed’s Schmid here.

Speaking today, Richmond Fed President Thomas Barkin said recent policy developments — including a major tax bill, immigration changes, and the completion of key tariff and trade negotiations — have lifted much of the “fog” around the economic outlook. What happens next, he said, will hinge on how households respond to potential price increases from tariffs.

Barkin pointed to evidence that consumers are front-loading purchases of goods while cutting back on services, a pattern that, if sustained, could limit tariff-driven inflation. “If we see this kind of demand destruction more broadly, the inflationary impact of tariffs would be less than many anticipate,” Barkin said.

If such shifts in spending occur more broadly, however, he said, “businesses will see volumes drop and margins squeezed. They will look for costs to cut. Employment could take a hit as a result”.

“We may well see pressure on inflation, and we may also see pressure on unemployment, but the balance between the two is still unclear,” he said. “As the visibility continues to improve, we are well positioned to adjust our policy stance as needed.”

Fed Governor Michelle Bowman signaled strong support for beginning interest rate cuts soon, saying in a speech over the weekend that tariff-driven price increases are a “one-time effect” and should fade without derailing the path back to 2% inflation. She argued that policy should “look through” temporary inflation spikes to avoid damaging the labor market.

She called for a gradual move toward the neutral rate, warning that delaying action risks a sharper deterioration in employment and slower economic growth. Bowman stressed that a “proactive approach” now would help avoid the need for larger policy corrections later if labor conditions worsen.

Bowman’s own Summary of Economic Projections still calls for three rate cuts this year, a view she has held since December. She noted that recent labor market data reinforce this stance, while reiterating that policy is not on a preset path. Bowman was one of two Fed governors to dissent last month against holding rates at 4.25%–4.50%, along with Christopher Waller.

Full speech of Fed’s Bowman here.