The Federal Reserve "hawkish" voices: Restrictive interest rates should be maintained to firmly contain inflation.

Kansas City Fed President Schmid stated that interest rates should be maintained at a level that continues to put pressure on the economy in order to further cool down inflation. "Given that inflation pressures have not yet eased, I am inclined to keep monetary policy within a mildly restrictive range," Schmid said in a prepared speech on Thursday at an event in Kansas City. He also pointed out, "While there are signs of cooling in the labor market, in order to avoid worsening inflation prospects, this cooling trend may continue for some time." At the end of 2025, Federal Reserve policymakers announced rate cuts at the last three meetings. Schmid voted against the two rounds of rate cuts in October and December last year, warning that a strong growth momentum in the economy could once again push up inflation. The market generally expects that the Federal Reserve will keep interest rates unchanged at the meeting at the end of this month, with investors widely believing that the next rate cut may be postponed until mid-year. Currently, the target range for the federal funds rate, the Federal Reserve's benchmark interest rate, is 3.5%-3.75%, which is at or near the "neutral rate" mentioned by several Federal Reserve officials, a rate level that neither stimulates nor restrains the economy. Schmid reiterated on Thursday that further rate cuts may not boost the labor market. U.S. employment growth has been weak in 2025, and he emphasized that the slowdown in the labor market is being driven by structural factors, while the Federal Reserve's policy tools are more suitable for addressing cyclical economic downturns. "I believe that further rate cuts will not be able to heal the existing rifts in the labor marketthese pressures are largely the result of structural changes brought about by technological innovation and adjustments in immigration policies," Schmid candidly stated. "My concern is that continued rate cuts may have a more lasting impact on inflation, as there are increasing doubts from external sources about our commitment to defending the 2% inflation target." Schmid also expressed his views on the independence of the Federal Reserve and its federal system structure. The Federal Reserve's decision-making team includes officials at the federal level in Washington as well as representatives from the 12 regional banks across the country. Recently, the Federal Reserve has faced increasing scrutiny from the Trump administration, with some government officials calling for a reexamination of the operating mechanisms of the Federal Reserve system. "The decentralized structure of the Federal Reserve allows for the incorporation of diverse viewpoints in the formulation of monetary policy," Schmid said. "This is the strength of the system. Only through the integration of different voices can discussions on monetary policy be more profound."