Fed Governor Schmid said current rate settings are not restraining the US
economy while inflation remains above the Fed’s 2% target, adding that
short-term rates may be accommodative and “we have more work to do.” At the July
meeting policymakers left the target range at 3.50%–3.75%; three officials
dissented in favor of a hike. Minutes showed several officials, including some
non-voters, backed raising rates and many said policy must tighten if inflation
does not fall. Schmid said he may have been among the dissenters and pushed back
on suggestions the Fed’s credibility was damaged after Fed Chair Kevin Warsh’s
weak July press conference, which prompted a strong bond-market reaction.
