Fed's Schmid hints at reluctance to cut rates again, rates are "close" to neutral

As the Federal Reserve faces a strong economy and inflation that remains above its 2% target as it enters the new year, Kansas City Fed President Schmid on Thursday signaled a reluctance to cut rates again. "We are now very close to achieving our dual goals of price stability and full employment," Schmid said in a speech to the Economic Club of Kansas City, and "with inflation close to target and economic growth showing continued momentum, I believe we are close to the tipping point where the economy needs neither restraint nor support, and policy should be neutral." In the current environment, "interest rates are likely to be very close to their long-run levels," Schmid said. "I favor gradual adjustments in policy and will only respond if the tone of the data changes persistently," he said, adding that "the strength of the economy allows us to be patient."