US FOMC Member Schmid Speaks

Fed's Schmid: Inflation is too hot and above target for too long. The Federal Reserve, Economic Outlook and Monetary Policy It is an honor to join you today. It is great to be back in Nebraska, my home state, and I look forward to our discussion. Just two weeks ago we marked our 250th birthday as a nation. And while we, as a country, might feel young in comparison to some other nations, the truth is that throughout history there are not many institutions or governments that have endured for as long. What is it that has made the United States so successful? One important element is the federated structure of the United States. Distributed power and decision-making across federal, state, and local governments connects Americans more closely within their communities and their government. It allows for a diversity of views and experimentation in how society should be governed. America has always had a healthy skepticism towards centralization and the concentration of power that has served us well over time.

SCHMID: INFLATION IS TOO HIGH; IT HAS BEEN A FIVE YEAR FIGHT AND THE FED IS STILL TRYING TO FIGURE IT OUT Fed's Schmid: Data suggests economy is doing well. FED'S SCHMID NOTED THAT ENERGY COSTS ARE A KEY DRIVER OF INFLATION, STATING THAT HOW LONG OIL PRICES STAY HIGH IS A POLITICAL FACTOR, WHILE THE FED CONTINUES ITS LONG-STANDING EFFORT TO BRING INFLATION DOWN. Fed's Schmid: The key question now is whether the Fed should remain patient on interest rates.

Fed's Schmid: We are not very restrictive on monetary policy right now Fed's Schmid: May need to weigh how to make monetary policy more restrictive FED'S SCHMID SAYS BALANCE SHEET COULD HELP IN POLICY RESTRICTIONS. FED'S SCHMID: EVERYONE IS ON 'PINS' WITH MIDDLE EAST WAR ISSUES FED'S SCHMID: IF WAR IS RESOLVED OIL PRICES SHOULD DROP || THERE IS TIME TO SEE HOW WAR IMPACTS ECONOMY #OOTT

Good morning. Thank you for joining us at this year's Future of Banking conference. I'm pleased to see so many community bank leaders gathered here today. Your presence reflects a shared commitment to understanding how our industry is evolving and how institutions can position themselves to thrive in the years ahead. When we talk about the "future of banking," it's tempting to think we're discussing something distant or theoretical. But the reality is that the future is already here. Many of the innovations that will define banking in the coming decade are already proven, operational, and creating opportunities for early adopters. My message today centers on how leveraging foundational infrastructure—particularly instant payments—can strengthen competitive positioning while maintaining the trust and relationships that have always been the hallmark of community banking. This isn't about abandoning, or even distracting from, what makes community banks special. It's about accessing technological innovation to further deliver on community banking’s promise and potential. I'll begin with my perspective on the economic environment, then discuss how technology is reshaping dynamics in banking, and finally examine how instant payments, and the Federal Reserve's FedNow Service in particular, provides infrastructure that community banks can leverage. My goal is to make clear that the path forward Fed's Schmid: The job market is functioning effectively. Fed's Schmid: Continued inflation is most pressing risk to economy, clear that it is still too high. Fed's Schmid: Conditions fundamentally sound in banking sector.

Thank you for joining me today. It’s always a pleasure to be in Oklahoma City, and I’m especially honored to be invited to the Rotary Club, an organization—as the slogan goes—that is committed to “Service Above Self.” The power of an organization like this arises from the value of its mission and the size of its membership. I’m told the Oklahoma City Rotary Club is among the largest in world. Talk about strength in numbers! When an organization has a large membership committed to a worthy mission, the collective impact can be extraordinary. I see many parallels between the Rotary Club and the organization I lead, the Federal Reserve Bank of Kansas City. We too have a public service mission: to promote economic and financial stability. The Fed was deliberately structured as a decentralized institution, with 12 independent and regionally defined Reserve Banks. At the Kansas City Fed we take very seriously our connection and service to the region. Ou Fed's Schmid key remarks: "There is a real risk inflation will get stuck closer to 3%." Inflation is the "more salient risk" for the Fed - "can't be complacent about inflation expectations." Higher energy prices will increase inflation, including core. Can't assume oil-driven… FED'S SCHMID: US ECONOMIC RESILIENCE SHOULD NOT BE UNDERESTIMATED. ...

Fed's Schmid: The labor market is under structural, not cyclical, strain.