Kansas City Fed President Jeffrey Schmid did not whisper. On the eve of the symposium his own bank hosts in Jackson Hole, he told Yahoo Finance that inflation is still too hot and that the short-term policy rate is “very accommodating.” He is not a voter on the Federal Open Market Committee this year. He is the host, and he is telling you the 2% scorecard is not met. Markets that were priced for a later-year cut have to sit with that sentence.
What he actually said
Jennifer Schonberger’s Yahoo Finance interview is the source that matches this headline. Schmid: “We haven’t achieved our mandated goal of 2%. I’m a very strong believer that if we’re going to have a scorecard for the Fed, it’s got 2% inflation, it’s got stable prices on it. We’re not there.” Then: “So the question becomes, and it’s the debated question, is the short-term policy rate too accommodative or restrictive? And I would say it’s very accommodating.”
He pointed to three “thoughtful” dissents at the July policy meeting and said he would have sided with the camp that inflation is too high and that action now is how you avoid larger hikes later. He dissented twice last year against rate cuts. “I dissented late last year. I’m still consistent with [that].”
The inflation print he was looking at: the Commerce Department’s Personal Consumption Expenditures index, released Wednesday. Core PCE — excluding food and energy — was up 3.3% in July from a year earlier. Month over month, prices rose 0.2%, up from 0.1% in June. Schmid said that print “didn’t inspire that we’re making progress.”
CNBC, interviewing him on “Squawk Box” from Jackson Hole on Thursday, got the same theme in different words: inflation is “still stubborn and it’s still sticky.” On the current 3.50%–3.75% target range, left there at the July 28–29 meeting: “I don’t know what we’re restricting currently with the rate policy that we’re at today.” Reuters confirmed the same quotes. The federal funds range of 3.50%–3.75% is from those reports, not from Schmid inventing a number on Yahoo.
He would not pre-commit to a 25 or 50 basis-point hike. “We’ll see.” He did say a hike of that size “probably moves behaviors, and I think that’s what you’re after,” and that “the one tool we have is policy rate.”
Demand, not just the oil shock
Schmid acknowledged higher energy prices from the Middle East conflict. He said he is more interested in demand: commodities plus the technology going into data centers, and not only from large tech — medium and small businesses too. He flagged a 20%–30% run-up in agricultural commodities “in the last few weeks” as “another inflationary element” that “must be demand.” Tariffs with Canada he brushed off as a small piece of a $30 trillion-plus economy. “It’s a big stew.”
That is a hawk’s framework: look through the supply shock, find the demand the funds rate can still touch. It is also an admission that the funds rate may not be doing much. If 3.50%–3.75% is “very accommodating” while core PCE sits at 3.3%, the prior hiking cycle has already been walked back into stimulative territory. Sitting out a speech is often the trade. Trading a non-voter’s interview is almost never the trade.
Warsh, six meetings, and PCE
Schmid said he wants to give Chair Kevin Warsh space, including time for the task forces Warsh has set up on communication, inflation and productivity data, jobs, and the balance sheet. Minutes from July showed Warsh floating a cut in FOMC meetings from eight per year to six, with the other two used for broader topics. Schmid: “I think there’s some legs to that.” More data between meetings, more trend, fewer reactions to one print.
On the inflation framework itself, he said he is not sure there is a better measure than PCE. He wants more real-time data from the technology task force. That is process talk, not a new target.
Schonberger noted that Warsh, at the July press conference, kept pointing to higher bond yields as a useful tightening via markets — a comment that first pushed long-term yields up and then produced confusion. Schmid implied he wants higher rates but is not going to jump the chairman’s keynote.
California and a Protected Wheel book
For a California borrower, “very accommodating” is a sick joke. Mortgage rates are still stuck near 6.7%. Housing here does not clear at a 3.6% funds rate when the 30-year is north of 6.5% and Prop 13 keeps incumbents in place. A hawkish Jackson Hole reprices rate-cut odds, then VIX, then the rate-sensitive sleeve. It does not reprice a Cupertino listing overnight.
This is a volatility input, not a trading alert. Schmid is not voting in 2026. Warsh’s Friday speech is the one that can move the curve. If you do not have a defined risk on duration, you do not need one because a regional president used the word “accommodating.” Educational commentary, not investment advice.
Source: Kansas City Fed’s Schmid says inflation is too hot, rates too accommodative on eve of Jackson Hole (Jennifer Schonberger, Yahoo Finance); CNBC; Reuters.
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