- Kansas City Fed’s Jeffrey Schmid says a September rate cut is unlikely without stronger inflation progress, despite markets betting on it.
- Trump and political allies continue to pressure the Fed, while a controversy involving Fed Governor Lisa Cook has added fresh drama.
- Schmid highlighted inflation’s “last mile” challenge, saying prices remain closer to 3% than 2%, even as the labor market looks solid.
Kansas City Fed President Jeffrey Schmid is throwing cold water on expectations of an interest rate cut in September, saying inflation progress isn’t strong enough to justify loosening policy just yet. Speaking with CNBC during the Fed’s annual Jackson Hole symposium, Schmid pushed back against market bets pointing to an 80% chance of a quarter-point cut at the September FOMC meeting.
“We’re in a really good spot,” Schmid said, noting that policymakers need definitive data before touching rates. “In September, we’ll sit down, look at the numbers, and figure it out. But there’s still a lot that can happen between now and then.”
Markets, Politics, and Pressure on the Fed
The Fed is facing mounting pressure—not just from traders but from the White House too. Former President Donald Trump has been openly demanding cuts, arguing that tariffs aren’t driving inflation higher and that cheaper borrowing would boost housing and ease government debt costs. Markets seem to agree, with rate cut odds heavily tilted toward September.
Schmid, however, isn’t convinced. “That last mile of inflation is the hardest,” he warned, adding that inflation still feels closer to 3% than 2%. In his view, the Fed may need more time to bring it fully under control, even if that means keeping policy restrictive longer than markets want.
Controversies and Political Heat
Normally, the Fed stays outside political storms. But lately, it’s been dragged right into them. On top of Trump’s calls for lower rates, the central bank is facing questions over expensive renovations in D.C.—and now a new scandal involving Fed Governor Lisa Cook.
This week, Trump and FHFA Director William Pulte accused Cook of mortgage fraud tied to federally backed loans in Michigan and Georgia. Trump even demanded her resignation, though Cook fired back, saying she won’t be bullied into stepping down. Schmid was cautious on the matter, simply stating: “We have responsibilities as professionals inside the Fed. I’m sure she’ll handle things as she needs to.”
Labor Market and Policy Outlook
Despite the political noise, Schmid emphasized that the labor market remains “solid,” echoing concerns from July’s Fed minutes that balanced both inflation and unemployment risks. For him, the bigger question is whether inflation data can show enough sustained progress to justify easing.
As he summed it up: “Great steel is tested by fire. Let’s have the debate—but more importantly, let’s make sure the American public really understands what the Fed does, and why it matters.”
