Voices are growing within the U.S. Federal Reserve (Fed) about halting the interest rate cut for September. Senior officials at the Fed have repeatedly expressed concerns about rising inflation and raised cautionary views. Ahead of next month's Federal Open Market Committee (FOMC), the Fed seems to be deep in thought.
Jeffrey Schmid, president of the Federal Reserve Bank of Kansas City, expressed skepticism about the possibility of an interest rate cut in September during a CNBC interview on the 21st (local time). He said at the annual economic policy symposium, "Jackson Hole Conference," held in Wyoming, "For the policy interest rate to move at this point, we need very decisive data." The Jackson Hole Conference is hosted by the Kansas City Fed. Schmid is a commissioner with voting rights at this year's FOMC.
Schmid believes the Fed is still far from declaring victory in the fight against inflation. He emphasized, "It seems that the last stretch to achieve the inflation target of 2% is quite difficult," saying, "I would like to say that the current inflation figure is closer to 3% than 2%. We still have work to do." In the minutes from the July FOMC, released the day before, he assessed that the U.S. labor market is in a "solid state." Given that prices are still high and employment is robust, this is interpreted as a judgment that there is no reason to rush to lower rates.
Other officials within the Fed also supported the cautious stance. Beth Hammack, president of the Cleveland Fed, said in an interview with Yahoo Finance on the same day, "If we were to hold the FOMC meeting tomorrow with the information we have now, I would not be able to find grounds to lower rates." He does not have voting rights at this year's FOMC. Raphael Bostic, president of the Atlanta Fed, also stated that he maintains his existing view that a single interest rate cut this year is appropriate.
These comments come as President Donald Trump and the White House apply aggressive pressure on the Fed for interest rate cuts. President Trump argues that the impact of tariffs on prices is minimal and that rates should be lowered to stimulate the dwellings market. Schmid dismissed such political pressure, stating, "Steel is tested by fire," adding, "It is more important for the American public to understand what the Fed is and what it does."
As senior Fed officials continue to speak out, investors who expected an interest rate cut next month are quickly losing interest. According to the Chicago Mercantile Exchange (CME) FedWatch, the market now estimates the probability of a 0.25 percentage point cut in September at 73.6%. This is significantly higher than the 92.1% expected on the 14th, just a week ago.