Fed Regional Presidents Warn Inflation Remains Stubborn as Core Prices Run at 3.3 Percent
Three regional Federal Reserve presidents said on Thursday that inflation is proving harder to bring down than policymakers had hoped, as central bankers gathered in Jackson Hole, Wyoming for the Kansas City Fed’s annual economic symposium. Their remarks came a day after the Bureau of Economic Analysis reported that the Fed’s preferred inflation gauge, the Personal Consumption Expenditures Price Index, stood at 3.7 percent for the twelve months through July, matching June and down from 4.1 percent in May, while the core measure that excludes food and energy stood at 3.3 percent.
Four Fed Voices, One Sticky Number
Kansas City Fed President Jeffrey Schmid said on CNBC that inflation is “still stubborn and it’s still sticky, and we’ve got to continue to find ways to break through” to get it back to the Fed’s 2 percent target. Schmid, who does not vote on the Federal Open Market Committee this year, said the current policy rate range of 3.50 to 3.75 percent, held at the July 28 to 29 meeting, does not appear to be restricting the economy. “I don’t know what we’re restricting currently with the rate policy that we’re at today,” he said, though he added he needs “a little bit more information” before deciding whether to back a rate increase at the Committee’s September 15 and 16 meeting.
Cleveland Fed President Beth Hammack, one of three officials who dissented last month in favor of a rate hike, told CNBC “I believe now is the time to act.” In a later interview on Fox Business Network, cited by Reuters, Hammack said she expects inflation to end 2026 near 3 percent and, at best, to reach only the middle of the 2 percent range next year. She also said she is hearing more contacts worried about an “inflationary mindset” taking hold, a trend she wants to avoid.
Chicago Fed President Austan Goolsbee, speaking on the Rapid Response podcast per Reuters, said his biggest short term concern remains that inflation is not under control. “Everybody should be on edge,” he said, pointing to elevated energy costs linked to the conflict in Iran and shifts in United States tariff policy as pressures on households. He said the recent three month inflation trend “doesn’t look terrible” and that the policy rate could still be lowered over time if the data cooperates.
Boston Fed President Susan Collins, speaking to Reuters in Jackson Hole, called the most recent inflation data “mixed” and said her base case remains “gradual disinflation” under a policy setting she views as slightly restrictive.
| Official | Reserve Bank | Position |
|---|---|---|
| Jeffrey Schmid | Kansas City | Rate not clearly restrictive; wants more data before backing a hike |
| Beth Hammack | Cleveland | Says now is the time to act; sees inflation near 3 percent by year end |
| Austan Goolsbee | Chicago | Says everybody should be on edge; flags energy and tariff pressures |
| Susan Collins | Boston | Calls the data mixed; still expects gradual disinflation |
The Rate Debate
The Federal Open Market Committee held the funds rate target range at 3.50 to 3.75 percent on 29 July by a nine to three vote, with Cleveland’s Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan all preferring a quarter point increase at that meeting, according to the Federal Reserve’s own statement.
On our calculation, the midpoint of the current policy rate range, 3.625 percent, sits only 0.325 percentage points above core inflation of 3.3 percent. This is a simple ex-post comparison rather than a conventional real policy rate, which would normally be measured against expected rather than backward-looking inflation, but it helps illustrate why officials can look at the same policy setting and reach different conclusions about how restrictive it actually is, which is consistent with Schmid’s own observation that the setting is not clearly restrictive.
Fed Chairman Kevin Warsh has not yet spoken. He is scheduled to deliver the conference’s keynote address on Friday, and markets are watching for signals on the policy outlook, tempered, per Reuters, by his consistent refusal to give firm forward guidance on rates.
Why it matters
The split among regional presidents, three flagging inflation risk and one calling the data merely mixed, comes into a Federal Open Market Committee that already saw three dissents in favor of a hike last month. With inflation running well above target and the policy rate’s midpoint only 0.325 percentage points above core inflation, the September 15 and 16 meeting is shaping up as a genuine live decision rather than a formality.
Outlook
Warsh’s Friday keynote is now the focal point of the symposium. Futures markets currently lean against a rate move at the September meeting but assign strong odds to one by the end of 2026.
Sources: Reuters, CNBC, U.S. Bureau of Economic Analysis, Federal Reserve.
