Schmid used two words repeatedly to describe inflation: stubborn and sticky. "It's still stubborn and it's still sticky, and ... we've got to continue to find ways to break through," he said.
The numbers back him up. The core PCE price index, which strips out food and energy, rose 3.3% year-over-year. That is well above the Fed's 2% target, and it explains why Schmid is not ready to declare victory.
"We're going to have our work cut out for us as we move into the [Federal Open Market Committee] cycle," he added. That cycle is the regular schedule of policy meetings where rate decisions are made.
The persistence of inflation at current levels has been a central challenge for the Fed, which has been working to bring price pressures back to its 2% goal while trying to avoid a sharp economic downturn.
Here is where Schmid's view gets interesting. He does not think the current policy rate is doing much to slow things down.
"I don't know what we're restricting currently with the rate policy that we're at today," Schmid said. The Fed's target range sits at 3.5%-3.75%, and he believes it is not putting meaningful brakes on borrowing or spending.
In the second quarter, the economy expanded at a 1.5% annualized rate, a modest pace that doesn't signal a collapse. With unemployment at 4.1%, the labor market appears to be holding up fairly well. Schmid said he needs more data to understand what is driving demand. "What I'm trying to figure out is the demand side of what's driving both growth and inflation," he noted.
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He also acknowledged that rates do matter, even if they are not biting right now. "I do know moving the rate does change the market behavior," he said.
Schmid's cautious stance reflects a broader debate among Fed officials about whether the current level of rates is sufficiently restrictive, or whether further tightening may be needed to ensure inflation returns to target.
Beyond rates, Schmid weighed in on an idea that Chairman Kevin Warsh raised. The proposal would cut the FOMC's annual meeting schedule from eight to six.
Schmid said there is "some room" to consider the change, and he supports it. He is not a voting FOMC member this year, but last year he voted against rate cuts on two occasions, so his views carry weight even when he does not have a vote.
Cutting the number of meetings to six per year would mean less frequent opportunities for the Fed to surprise markets. That could reduce volatility, but it also gives the Fed less flexibility to respond quickly if conditions shift.
The discussion about meeting frequency comes as the Fed reviews its operational practices, with some officials arguing that a reduced meeting schedule could allow for deeper deliberation on policy decisions.
For your portfolio, the takeaway is straightforward. Inflation is running hotter than the Fed wants, and the current rate is not doing heavy lifting. That combination suggests rates could stay where they are for a while, and the path forward depends on whether demand cools on its own. Schmid is watching the same numbers you are, and he is not convinced yet.