WASHINGTON (AP) — Jeffrey Schmid, a former banking executive, has been appointed the next president of the Federal Reserve Bank of Kansas City, beginning Aug. 21.
As president of one of the 12 regional Fed banks, Schmid will participate in the eight meetings the Fed holds each year to determine the path of short-term interest rates. Schmid is joining at a fraught time, as Fed officials are considering whether to lift their key interest rate for a 12th time in the past year and a half at their next meeting in September.
Another increase would be intended to combat inflation, which has fallen sharply from last summer’s four-decade high. Too many rate hikes by the Fed could push the economy into recession.
Schmid will replace Esther George, who retired in January as required by mandatory retirement rules. While he will participate in meetings, Schmid won’t have a vote on interest rate decisions until 2025, because the regional Fed presidents vote on a rotating basis, usually once every three years.
George was generally a hawkish president, meaning she typically favored higher interest rates to keep inflation under control. “Dovish” Fed officials, by contrast, usually support lower rates to bolster growth and hiring. Historically, the president of the Kansas City Fed has tended toward hawkish views.
Fed policymakers have signaled they may support one more increase in the central bank’s key rate, which is currently at about 5.4%, its highest level in 22 years. Most economists expect the Fed will forego another increase as inflation falls, but some think it could happen at the Fed’s upcoming meetings in September or November.
As president of the Kansas City Fed, Schmid will also oversee bank regulation in his district, which includes Kansas, western Missouri, Nebraska, Colorado, Oklahoma, Wyoming and northern New Mexico. Schmid is currently CEO of the Southwestern Graduate School of Banking Foundation at Southern Methodist University, where he attended a summer residence program in 1990.
“Jeff’s perspective as a native Nebraskan, his broad experience in banking, and his deep roots in our region will be an incredible asset to the Federal Reserve, both as a leader of the organization and in his role as a monetary policymaker,” said María Griego-Raby, deputy chair of the Kansas City Fed’s board of directors. Griego-Raby led the search committee that selected Schmid.
Bankers serve on the boards of the regional Fed banks, but they are not allowed to participate in the selection of presidents, to limit the influence of the financial industry.
Schmid was CEO of Mutual of Omaha Bank from 2007-2019, and then became CEO of Susser Bank, a family-owned company in Dallas. He began his career as a bank examiner at the Federal Deposit Insurance Corp. in 1981, until becoming president of American National Bank in Omaha in 1989.