Kansas City Fed President Jeffrey Schmid isn’t mincing words. Inflation is his “biggest worry,” and he sees a real risk that prices could accelerate further in the months ahead.
Schmid stated on June 4 that inflation numbers had “probably crept up into the three and a half percent range.” That’s not a rounding error above the Fed’s 2% target. It’s nearly double.
Inflation has now exceeded that 2% target for over five years. The federal funds rate currently sits in the 3.50% to 3.75% range, where it has been held through mid-2026. Schmid has been advocating restraint, meaning he’d rather keep rates elevated, or push them higher, than risk letting inflation run hotter.
Back in October 2025, Schmid dissented against a rate cut, arguing that the inflationary landscape outweighed labor market considerations. Energy prices have made the picture worse. Geopolitical developments, particularly in the Middle East, have pushed energy costs higher, compounding the inflation problem that the Fed was already struggling to solve.
Bitcoin has historically performed best in environments where the Fed is easing monetary policy or signaling that it will. The 2020-2021 bull run coincided with near-zero interest rates and unprecedented liquidity injections. The 2022 crash tracked almost perfectly with the Fed’s aggressive tightening campaign.
