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Fed's Schmid Says Tighter Policy Needed, June Cut Odds Drop

8/5/2026

44 10 Full Breakdown

Summary

Story summary

On August 4, Federal Reserve Bank of Kansas City President Jeff Schmid said the Fed may need tighter policy as March CPI rose 3.5%, leaving inflation above target.
Remarks cut odds of a June 11-12 rate cut to 40% from 55% and pushed 10-year Treasury yield to 4.65%.
Schmid warned that oil prices and AI investment add inflation pressure, and said three officials voted for a hike at the last meeting, indicating split.

History

Historical Context

Jimmy Carter appointed Paul Volcker as Fed chairman in 1979; after the October 6 FOMC meeting he lifted the federal funds rate from 11.5% to 17.6% by April 1980, pushing inflation—13.5% in 1980—into recession. Kansas City Fed President Jeff Schmid warns that renewed oil-price spikes and AI-driven spending could again demand tighter policy.

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Story summary

On August 4, Federal Reserve Bank of Kansas City President Jeff Schmid said the Fed may need tighter policy as March CPI rose 3.5%, leaving inflation above target.
Remarks cut odds of a June 11-12 rate cut to 40% from 55% and pushed 10-year Treasury yield to 4.65%.
Schmid warned that oil prices and AI investment add inflation pressure, and said three officials voted for a hike at the last meeting, indicating split.

1 / 2