Fed's Kansas City President Says Rates Aren't High Enough to Beat Inflation

According to statements made Tuesday, Kansas City Federal Reserve President Jeff Schmid said monetary policy is not restrictive and tighter policy will be needed to bring inflation back to the Fed's 2% target. His remarks followed the Fed's decision last week to hold interest rates at 3.50%-3.75%, a decision three officials opposed, favoring a quarter-point hike.

Meanwhile, Philadelphia Fed President Anna Paulson took a different stance, saying policy is already mildly restrictive. CME FedWatch data shows traders pricing in a 56.9% probability of a rate hike in September, with 83.2% odds of at least one increase by December.