(Reuters)-The Federal Reserve faces a complicated picture for monetary policy decisions, said Kansas City’s Fed President Jeff Schmid on Wednesday, noting that while he is listening to nervousness in relation to commercial agricultural sector, a recent drop in energy prices can provide a compensatory “injection” that could limit inflation a little.
“I think we need to have a little patience to see how some of these things will unfold,” Schmid said in a webcast conversation with Dallas Fed President Lorie Logan at a Dallas Fed event.
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In the end, he said, the Fed will “react positively to any of these interruptions that may affect this double mandate,” referring to the Fed’s mandates to achieve both price stability and full employment.
Earlier on Wednesday, Fed’s Chair, Jerome Powell, said the US Central Bank would expect more data on the economy before considering any interest change. But he warned that President Donald Trump’s tariff policies are at risk of increasing inflation and unemployment, which could force the Fed to choose which mandate prioritize.
Schmid and Logan did not have an in -depth discussion about interest rate policy or the recent market volatility, as investors are digesting the implications of Trump’s trade policy.
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Schmid spoke briefly about the importance of Fed’s political independence, which, according to him, is what allows monetary authority policy makers to define interest rates with only the financial and economic stability of Americans.
“Everything is being questioned now.… All the protections we thought we had had turned into screen doors,” he said. But, he added, “I think you are tested by fire… and frankly the people with whom I talk to, both politicians and the public, they seem to be satisfied with this structure, so I am very optimistic.”
