Concerns Over Inflation Expectations

Federal Reserve Bank of Kansas City President Jeff Schmid expressed concerns on Thursday about the potential for a further jump in prices to push up inflation expectations. "Once inflation is embedded in expectations, it becomes much more difficult to contain," Schmid warned, highlighting the importance of maintaining the Fed’s credibility on inflation.

Economic Strength and Challenges Ahead

Schmid noted that the US economy is entering a challenging period from a position of strength, thanks to sustained momentum and a healthy labor market. However, he cautioned that the Fed would need to carefully balance inflation risks against growth and employment concerns, given the elevated uncertainty and increases in near-term inflation expectations.