Fed’s Schmid warns inflation broadening, despite muted tariff effects

At an event overnight, Kansas City Fed President Jeff Schmid warned that price increases have become “more widespread”, with 80% of inflation categories rising, compared with 70% earlier this year. He called the trend “worrying,” indicating that underlying inflation pressures remain entrenched.

Schmid said he sees a “relatively muted effect” from tariffs on inflation, but viewed that as a signal that monetary policy is well positioned, not as evidence to justify “aggressively lowering” rates.

He added that the Fed faces difficult trade-offs between its dual mandates but insisted it “must maintain its credibility on inflation”.