Fed's Schmid calls for tighter monetary policy to tamp down on 'too high' inflation

Federal Reserve Bank of Kansas City President Jeff Schmid said on Tuesday that some sort of monetary policy tightening is needed to get “too high” inflation back to the 2% target.

“The economy appears to be performing well with the notable exception of inflation,” Schmid said in the text of a speech to be delivered before an event held by his bank on farming issues.

“My primary concern is inflation” and given recent data it does not look like monetary policy is restrictive and leaning against those price pressures, Schmid said. “As such, I believe that bringing inflation down to the Fed’s 2 percent objective will require tighter policy.”

The official, who does not currently have a vote on the interest-rate-setting Federal Open Market Committee, did not say when or by how much he’d like the Fed to raise rates.

Schmid’s remarks were his first since last week’s FOMC meeting. Then, officials voted in favor of keeping the federal funds target rate range steady at between 3.5% and 3.75% amid long-running worries that inflation is too high.