On the eve of Powell's speech, the presidents of the Kansas City and Atlanta Federal Reserves speak out

According to the Zhitong Finance APP, Kansas City Federal Reserve President Jeff Schmid stated that he believes the inflation risk is slightly higher than the labor market risk. Nevertheless, as policymakers consider whether to adjust interest rates next month, monetary policy is generally in an appropriate position.

Schmid said, "As you gradually approach the optimal values of the dual mandate, it actually becomes more difficult to marginally decide where the policy rate should go." He noted that the current debate around when to cut rates centers on whether individual policymakers believe the policy is too tight. He added, "I think they are slightly restrictive." "I believe we are on a good path."

Schmid will kick off the Jackson Hole Global Central Bank Annual Meeting hosted by the Kansas City Federal Reserve later on Thursday. Market observers will closely watch Federal Reserve Chairman Jerome Powell's speech on Friday to gauge whether he will reveal potential actions for the Fed at the September meeting. Analysts point out that Powell may find it difficult to send a clear signal, especially since some colleagues are not in a hurry to cut rates.

The U.S. consumer and producer price data released last week for July indicated that inflation has accelerated in recent months. This data also provides new evidence that businesses are able to pass some of the rising import costs onto consumers. Meanwhile, job growth has slowed in the summer, with employers adding an average of only 35,000 employees per month over the past three months.

In another interview, Schmid noted that the July Producer Price Index (PPI) showed wholesale inflation accelerating at the fastest pace in three years, which is "somewhat surprising." He pointed out that policymakers will closely monitor consumer price data later this month and before the September meeting.

In addition to Schmid, Atlanta Federal Reserve President Raphael Bostic also believes that the current monetary policy is "slightly restrictive rather than highly restrictive." He stated that the Fed should be able to lower interest rates to neutral levels—where rates neither stimulate nor suppress the economy—sometime in 2026. He also mentioned that his view on interest rates remains that there will only be one rate cut this year.

In the face of economic uncertainty, Bostic's trajectory for interest rates remains in a single direction, rather than swinging between rate hikes and cuts. He expects more clarity on the economic outlook later this year.

Bostic stated that inflation has "basically fluctuated sideways" over the past eight to nine months, remaining in the range of 2.5% to 2.8%, above the Fed's 2% target. He also noted that although the unemployment rate remains at historically low levels, there are signs that the labor market is weakening. He pointed out that the significant downward revision of non-farm payrolls in May and June indicates that "the strength of job creation has greatly diminished," but a single data point cannot form a trend. He also mentioned that the development of artificial intelligence may reduce demand for labor in real-time