Fed's Schmid Warns Against Dismissing Energy Price Surge as Transitory Amid Hot Inflation

Kansas City Federal Reserve President Jeffrey Schmid cautioned on May 29, 2026, that today’s elevated inflation makes it too risky to assume the recent energy price shock is temporary. "Now is not the time to let down our guard," Schmid said in prepared remarks, stressing that inflation has stayed above the Fed's 2% target for too long. His warning lands as monetary policy expectations have shifted: the Fed is widely seen holding its benchmark rate at 3.5%-3.75% at its June meeting, with markets now pricing a possible rate increase rather than cuts later this year. Schmid did not spell out how his inflation view affects his policy stance. Schmid noted that U.S. energy producers remain reluctant to boost output despite higher prices, citing capital discipline among firms in his district. He described the labor market as balanced, acknowledging potential but unrealized AI disruptions, and said most economic indicators point to continued steady growth.