A trio of Federal Reserve officials shared on Thursday their ongoing concerns about the U.S. inflation landscape, as central bankers gathered in Jackson Hole, Wyoming for the Kansas City Fed's closely watched annual economic symposium. Inflation is "still stubborn and it's still sticky and we've got to continue to find ways to break through" and get it back to 2%, Kansas City Fed President Jeffrey Schmid said on CNBC on the sidelines of the conference.

Market Context

The Jackson Hole symposium, hosted by the Federal Reserve Bank of Kansas City, has historically served as a platform for central bankers to signal policy direction. This year's gathering occurs against a backdrop of persistent inflation that has exceeded the Fed's 2% target for more than five years. Treasury yields have shown sensitivity to hawkish commentary, with market participants closely monitoring any shift in the Fed's stance heading into the September 15-16 policy meeting.

Analysis

Schmid noted that the U.S. central bank's current policy rate, which was left in the 3.50%-3.75% range at the July 28-29 meeting, did not appear to be restrictive. "I don't know what we're restricting currently with the rate policy that we're at today," Schmid said. The Kansas City Fed president suggested he would still favor raising rates to help bring inflation back down to the Fed's 2% target.

Cleveland Fed President Beth Hammack echoed similar concerns about inflation and reiterated her ongoing willingness to act. "I don't want to prejudge anything," Hammack said, "but I believe now is the time to act." Hammack was one of three Fed officials who dissented at last month's meeting in favor of a rate hike.

Chicago Fed President Austan Goolsbee weighed in from a different angle, expressing his biggest fear remains that inflation is not under control. "Everybody should be on edge," Goolsbee said on the Rapid Response podcast. "We hear a lot about affordability and we better be mindful because if inflation starts going up again, it's very hard to get rid of it."

Key Numbers

- Current Fed policy rate: 3.50%-3.75% range (set at July 28-29 meeting)

- Fed's inflation target: 2%

- Duration of above-target inflation: more than five years

- Next FOMC meeting: September 15-16

What to Watch

Market participants will closely watch upcoming economic data releases ahead of the September FOMC meeting. Schmid indicated a desire for "a little bit more information" on the demand side driving growth and inflation before committing to rate hike expectations. Hammack's warning about an "inflationary mindset" embedding itself in the economy suggests growing concern among Fed officials about long-term inflation expectations becoming unanchored.

Hammack specifically noted she is hearing more and more from contacts worried about inflation, and she fears the longer this trend continues, the greater the risk to the central bank's credibility.