The Kansas City Fed's annual economic symposium in Jackson Hole, Wyoming, officially got underway on Thursday, August 27th. On the opening day, Kansas City Fed President Jeffrey Schmid, Cleveland Fed President Beth Hammack, and Chicago Fed President Austan Goolsbee each publicly shared their views on inflation and monetary policy. All three officials stressed that price growth remains significantly above the 2% target level. Among them, hawkish representative Hammack explicitly called for immediate action to combat inflation; Schmid questioned whether the current policy rate of 3.50% to 3.75% is sufficiently restrictive; and Goolsbee cautioned that the biggest near-term risk is still that inflation fails to be effectively contained.

Schmid: Inflation is stubborn and sticky, questioning the restrictiveness of current policy rates

Kansas City Fed President Schmid, in a television interview at the conference venue, stated that U.S. inflation remains "stubborn and highly sticky," and the Fed must exhaust all avenues to bring it back to the 2% target range. He noted that with the next Federal Open Market Committee (FOMC) decision cycle approaching, the workload for policy formulation will be extremely heavy (Schmid does not have a vote this year). The FOMC maintained the federal funds rate target range at 3.50% to 3.75% at its July meeting. Against the macroeconomic backdrop of Q2 GDP growing at an annualized rate of 1.5% and unemployment holding at 4.1%, Schmid questioned: "At the current level of interest rate policy, I don't know what exactly it is constraining." When asked about the possibility of a rate hike at the September 15-16 meeting, Schmid remained open-minded, stating that more data is needed to verify the specific driving mechanisms of demand-side and supply-side factors on economic growth and inflation. Commerce Department data released Wednesday showed the U.S. PCE price index rising 3.7% year-over-year in July, while the core PCE price index climbed 3.3%, both far exceeding the 2% target line.

Hammack: Inflation has exceeded target for over five years, "action should be taken now"

Cleveland Fed President Hammack also delivered a clear hawkish signal at the conference. As one of the three dissenting committee members who voted for a 25-basis-point rate hike at the July meeting, Hammack stated plainly that although she doesn't want to prejudge, she firmly believes "action should be taken now." Hammack emphasized that nationwide inflation has exceeded the 2% policy target for more than five consecutive years; combined with current financial conditions and feedback from market participants, the existing policy has not demonstrated sufficient restraining force. Her forecasts: for inflation this year, it is expected to end around 3% by year-end; for improvement next year, downward inflation progress is expected to be very limited, possibly only easing to around 2.5% in an optimistic scenario. Hammack specifically warned that if the psychological expectation of persistently high inflation becomes entrenched in the microeconomy, it would cause greater damage, and policy must act preemptively.

Goolsbee: The core near-term risk is inflation spiraling out of control; rate cuts require a return to 2% as a prerequisite

Chicago Fed President Goolsbee, speaking on the "Rapid Response" podcast, pointed out that the biggest challenge facing policymakers in the near term remains the failure to completely control inflation. "Everyone must remain on high alert, because if inflation makes a second surge, the cost of trying to suppress it again afterward would be extremely high." Goolsbee noted that although price trends over the past three months "don't look too bad," fluctuations in tariffs and energy prices continue to impose real burdens on American households. He emphasized that any future rate cuts must be premised on "clear evidence that inflation is steadily moving toward 2%," and advised interest-rate-sensitive industries and businesses to closely monitor actual data developments, rather than being led by aggressive market pricing of the policy path.

Market awaits Warsh's debut; data uncertainty remains ahead of September decision

This year's symposium, hosted by the Kansas City Fed, runs through August 29. Fed Chair Kevin Warsh's highly anticipated first Jackson Hole address since taking office is scheduled for around 10 a.m. Eastern Time on Friday. Previously, Warsh did not provide clear forward guidance on the economic and interest rate trajectory at either the June or July FOMC press conferences. Currently, federal funds futures still reflect heavy market bets on the Fed holding steady in September. Before the September 15-16 FOMC decision, the August nonfarm payrolls report and the latest CPI/PCE price data will be released. However, the collective warning from the three regional Fed presidents on inflation stickiness on the opening day of Jackson Hole has already set a hawkish tone for the second-half monetary policy debate.