Fed officials step up at the governors' conference: "Now is the time to act" against inflation

Three Federal Reserve officials expressed ongoing concern today about the state of inflation in the US, as the annual Kansas City Fed economic symposium opened in Jackson Hole, Wyoming.

"Inflation is still stubborn and it is still sticky, and we must continue to find ways to break through the barrier" and return it to the 2% target, said Kansas City Fed President Jeffrey Schmid to CNBC during the conference. Schmid added that the central bank's current interest rate, which remained in the 3.50%-3.75% range at the meeting held at the end of July, does not appear to be restrictive.

"I don't know what we are restricting right now through the interest rate policy we are in today," he said. Schmid, who recently supported an interest rate hike, signaled that he is still open to such a move, given his assessment that monetary policy is not curbing price pressures. However, when asked about the possibility of an interest rate hike at the Fed's upcoming policy meeting on September 15 and 16, he replied that he needs more information regarding the demand side of the economy.

Cleveland Fed President Beth Hammack also expressed concern about inflation and reiterated her willingness to act to bring price pressures back on the desired path. "I don't want to pre-judge anything," Hammack said, "but I believe now is the time to act." Hammack, one of three Fed officials who voted in favor of an interest rate hike last month, said that inflation has been above target for more than five years and that monetary policy is currently doing little to restrain the economy.

Chicago Fed President Austan Goolsbee said his biggest concern in the short term continues to be that inflation is not under control. "Everyone needs to be on alert," Goolsbee said on the Rapid Response podcast. He noted that the rise in energy costs related to the war in Iran, as well as the ongoing fluctuations in the Trump administration's tariffs, are sources of concern that hurt households.

The administration recently reported that the Personal Consumption Expenditures price index, the Fed's primary inflation gauge, rose by 3.7% in the 12 months ending in July. Focus is now shifting to Federal Reserve Chair Kevin Warsh, who is expected to speak tomorrow in Jackson Hole.