Federal Reserve Bank of Kansas City President Jeff Schmid warned that inflation remains nearly a percentage point above the central bank's 2% target, with no progress toward the goal in 2025. Speaking in Denver, Schmid noted inflation has exceeded the Fed's objective for nearly five years, leaving no room for complacency on price pressures.

Data released last month showed underlying inflation in the Fed's preferred measure rose 3% in the 12 months through December, marking the third consecutive month of unchanged readings. Schmid pointed to inflationary pressures in both tariff-impacted goods and services, while acknowledging that emerging technologies like artificial intelligence could eventually support non-inflationary growth. However, he emphasized that this potential has not yet materialized.

The Kansas City Fed president also highlighted the labor market's balance, noting that high demand for health-care workers is putting pressure on profit margins in the sector. Health care accounted for nearly all new job creation in 2025, a trend Schmid said could contribute to additional inflation as the population ages.