Hawkish Federal Reserve officials are hawking eagles one after another: Schmid says interest rates are still not high enough, Paulson warns that the risk of inflation has not been eliminated

Comparing news, concerns about the risk of inflation are heating up within the Federal Reserve. Kansas City Federal Reserve Chairman Jeffrey Schmid and Philadelphia Federal Reserve Chairman Anna Paulson have successively sent hawkish signals, suggesting that if inflation continues to be high, monetary policy may need to be further tightened in the future.

Schmid said that the current monetary policy stance is not restrictive. Against the backdrop of strong demand and the expansion of corporate investment, the Federal Reserve may need to adopt a tighter policy in order to push inflation back to the 2% target.

Schmid warned that the market should not simply assume that the price pressure caused by the supply shock will quickly subside. He said he is concerned about the assumption that the surge in inflation is only a temporary phenomenon. The duration of inflation will depend on the Federal Reserve's policy response and the market's expectations for future policies.

Philadelphia Federal Reserve Chairman Paulson also said that the future interest rate path will depend on core inflation trends, and said that he remains open to policy adjustments.

Paulson pointed out that if core inflation continues to improve and long-term inflation expectations are stable, the current interest rate level may be sufficient to limit economic growth; however, if core inflation continues to run at a high level, it means that more austerity policies are needed.

She said that recently, core inflation in the US has only declined moderately, and is currently still in the range of about 2.4% to 2.8%. Long-term high core inflation is still an important factor in evaluating policies.

Last week, the Federal Reserve kept interest rates unchanged for the fifth consecutive meeting, but 3 policymakers voted to raise interest rates by 25 basis points, believing that early action would help avoid more aggressive austerity in the future. Recent data showed that the US core PCE inflation in June fell short of expectations, and consumer spending performance was strong. Paulson said that improving inflation data is a step in the right direction, but progress is still limited.

Officials are also concerned about potential inflationary pressure from the Middle East conflict and investment in AI infrastructure. Paulson said that while AI infrastructure construction boosts economic growth, it may also push up prices in some areas.