The "hawkish" voice of the Federal Reserve is loud! Schmiede warns: Inflation is still the biggest concern, and a one-month cooling down does not represent a turning point in the trend.

Kansas Federal Reserve Chairman Jeff Schmidt said that given the possibility of further escalation of inflation risks in the coming months, inflation is currently his biggest concern. Despite better than expected inflation data for June in the United States, Schmidt warned that it is premature to determine that inflation is beginning a downward trend. Speaking at an economic forum hosted by the Kansas City Fed in Nebraska on Thursday, Schmidt said, "My biggest concern is inflation, the current level of inflation is too high and has been exceeding the target level for too long. Therefore, when formulating an appropriate monetary policy path, I still focus on the issue of inflation." Schmidt stated that inflation pressure is not limited to energy prices, but also includes a wide range of goods and services, including food prices. He pointed out that the rate of increase in food prices has exceeded pre-pandemic average levels. He said, "In terms of inflation, we have not yet reached our desired goal." This statement is consistent with the remarks of several Federal Reserve officials this week, with many officials ready to take policy action to push inflation back down to the Fed's target of 2%. Earlier on Thursday, Dallas Fed President Lori Logan called for a slight rate hike to lower inflation. Federal Reserve Vice Chairman Jefferson stated that if inflation does not cool down quickly, consideration should be given to raising rates, but also stated that the current monetary policy stance is good. This week, Federal Reserve Chairman Kevin Wash testified before Congress, saying that policymakers have "zero tolerance" for high inflation and are committed to restoring price stability, but he did not explicitly state support for rate hikes. Minutes from the Federal Reserve's policy meeting on June 16-17 showed that while officials had slightly eased their concerns about the labor market, their concerns about inflation were growing. At his first meeting under Wash's leadership, officials unanimously voted to keep the Fed's benchmark rate in the range of 3.5% to 3.75% for the fourth consecutive time. Data released this week showed that producer and consumer price increases in the United States in June were lower than expected. Investors reacted strongly to this, no longer expecting a rate hike this month. But Schmidt countered the view that policymakers could ignore one-time price shocks, believing that this view did not consider the role of demand. Schmidt said, "One of the lasting lessons of the Covid-19 pandemic is that inflation is never just a supply problem. Strong demand is almost always another important factor." Schmidt's assessment of the U.S. economy is relatively optimistic. He said, "The labor market is in a balanced state, and economic growth remains strong." The Federal Reserve will announce its next rate decision on July 29th. According to the "Fed Watch" tool from the Chicago Mercantile Exchange (CME), traders currently believe there is an 88.8% likelihood that the Fed will maintain rates in July, with the market generally pushing back the next rate hike window to September or October.