Fed officials: Don't want to take lightly the tariff-driven price increases.

Kansas City Fed President Schmid expressed concerns on Thursday that tariffs may reignite inflation, saying that the pressure of price increases may become evident in the coming months, but its full impact may take longer to fully materialize. This statement indicates that Schmid may lean towards keeping the Fed's policy rate unchanged, not only at the upcoming meeting on June 17-18, but also for some time afterwards, to ensure that current inflation, close to the Fed's 2% target, does not spiral out of control. Currently, the market widely expects the Fed to stay put at the June meeting. Schmid said, "Although theoretically monetary policy should ignore one-time price increases, I am not willing to bet the correctness of the theory using the reputation and credibility of the Fed." At the same time, he stated that despite the general belief that tariffs will slow economic growth and weaken the labor market, he remains "optimistic" about the economic momentum.