Feds Jeff Schmid: Assess Tariff Effects Before Rate Cuts

WASHINGTON (Reuters) - The U.S. Federal Reserve has ample time to assess the impact of escalating import tariffs on prices and economic growth before deciding on further interest rate cuts, according to Kansas City Fed President Jeff Schmid, who spoke on Tuesday at an agricultural summit in Nebraska.

"The current stance of monetary policy, which can be characterized as 'wait-and-see,' is appropriate," Schmid said in his prepared remarks. "The resilience of the economy gives us the time to observe how prices and the economy develop" before making any changes to the benchmark policy rate.

Schmid, who is a voter on the Fed's rate-setting Federal Open Market Committee this year, noted that the Fed has held its benchmark rate steady in a range from 4.25% to 4.5% since December, despite calls from President Donald Trump for rate cuts.

Fed officials have recently projected two rate cuts by the end of the year, but have highlighted uncertainty around trade policy and anticipate slower growth, higher unemployment, and higher inflation in the coming months.

Inflation remains above the Fed's 2% target, and "contacts almost uniformly expect increased tariffs to push up prices and weigh on activity," Schmid said, adding that it seems "likely" the Fed's inflation and job goals "will come into conflict." However, "there is far less clarity on when and by how much," he said, arguing for leaving interest rates unchanged until the economy's direction is clearer.

(Reporting by Howard Schneider; Editing by Jamie Freed)